[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]


 
  THE AMERICAN ENERGY INITIATIVE, PART 3: TRANSPARENCY IN REGULATORY 
             ANALYSIS OF IMPACTS ON THE NATION ACT OF 2011 

=======================================================================

                                HEARING

                               BEFORE THE

                    SUBCOMMITTEE ON ENERGY AND POWER

                                 OF THE

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             FIRST SESSION

                               __________

                             APRIL 7, 2011

                               __________

                           Serial No. 112-35


      Printed for the use of the Committee on Energy and Commerce

                        energycommerce.house.gov

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                    COMMITTEE ON ENERGY AND COMMERCE

                          FRED UPTON, Michigan
                                 Chairman

JOE BARTON, Texas                    HENRY A. WAXMAN, California
  Chairman Emeritus                    Ranking Member
CLIFF STEARNS, Florida               JOHN D. DINGELL, Michigan
ED WHITFIELD, Kentucky               EDWARD J. MARKEY, Massachusetts
JOHN SHIMKUS, Illinois               EDOLPHUS TOWNS, New York
JOSEPH R. PITTS, Pennsylvania        FRANK PALLONE, Jr., New Jersey
MARY BONO MACK, California           BOBBY L. RUSH, Illinois
GREG WALDEN, Oregon                  ANNA G. ESHOO, California
LEE TERRY, Nebraska                  ELIOT L. ENGEL, New York
MIKE ROGERS, Michigan                GENE GREEN, Texas
SUE WILKINS MYRICK, North Carolina   DIANA DeGETTE, Colorado
  Vice Chairman                      LOIS CAPPS, California
JOHN SULLIVAN, Oklahoma              MICHAEL F. DOYLE, Pennsylvania
TIM MURPHY, Pennsylvania             JANICE D. SCHAKOWSKY, Illinois
MICHAEL C. BURGESS, Texas            CHARLES A. GONZALEZ, Texas
MARSHA BLACKBURN, Tennessee          JAY INSLEE, Washington
BRIAN P. BILBRAY, California         TAMMY BALDWIN, Wisconsin
CHARLES F. BASS, New Hampshire       MIKE ROSS, Arkansas
PHIL GINGREY, Georgia                ANTHONY D. WEINER, New York
STEVE SCALISE, Louisiana             JIM MATHESON, Utah
ROBERT E. LATTA, Ohio                G.K. BUTTERFIELD, North Carolina
CATHY McMORRIS RODGERS, Washington   JOHN BARROW, Georgia
GREGG HARPER, Mississippi            DORIS O. MATSUI, California
LEONARD LANCE, New Jersey            DONNA M. CHRISTENSEN, Virgin 
BILL CASSIDY, Louisiana              Islands
BRETT GUTHRIE, Kentucky
PETE OLSON, Texas
DAVID B. McKINLEY, West Virginia
CORY GARDNER, Colorado
MIKE POMPEO, Kansas
ADAM KINZINGER, Illinois
H. MORGAN GRIFFITH, Virginia

                                  (ii)
                    Subcommittee on Energy and Power

                         ED WHITFIELD, Kentucky
                                 Chairman
JOHN SULLIVAN, Oklahoma              BOBBY L. RUSH, Illinois
  Vice Chairman                        Ranking Member
JOHN SHIMKUS, Illinois
GREG WALDEN, Oregon                  JAY INSLEE, Washington
LEE TERRY, Nebraska                  JIM MATHESON, Utah
MICHAEL C. BURGESS, Texas            JOHN D. DINGELL, Michigan
BRIAN P. BILBRAY, California         EDWARD J. MARKEY, Massachusetts
STEVE SCALISE, Louisiana             ELIOT L. ENGEL, New York
CATHY McMORRIS RODGERS, Washington   GENE GREEN, Texas
PETE OLSON, Texas                    LOIS CAPPS, California
DAVID B. McKINLEY, West Virginia     MICHAEL F. DOYLE, Pennsylvania
CORY GARDNER, Colorado               HENRY A. WAXMAN, California (ex 
MIKE POMPEO, Kansas                      officio)
H. MORGAN GRIFFITH, Virginia
JOE BARTON, Texas
FRED UPTON, Michigan (ex officio)
  





















                             C O N T E N T S

                              ----------                              
                                                                   Page
Hon. Ed Whitfield, a Representative in Congress from the 
  Commonwealth of Kentucky, opening statement....................     1
    Prepared statement...........................................     2
Hon. Bobby L. Rush, a Representative in Congress from the State 
  of Illinois, opening statement.................................     4
Hon. John Shimkus, a Representative in Congress from the State of 
  Illinois, opening statement....................................     5
Hon. Henry A. Waxman, a Representative in Congress from the State 
  of California, opening statement...............................     6
Hon. Fred Upton, a Representative in Congress from the State of 
  Illinois, prepared statement...................................   112

                               Witnesses

Gerry Cauley, President and Chief Executive Officer, North 
  American Electric Reliability Administration...................     8
    Prepared statement...........................................    10
Eric Schaeffer, Executive Director, Environmental Integrity 
  Project........................................................    27
    Prepared statement...........................................    29
Mark A. Bailey, President and Chief Executive Officer, Big Rivers 
  Electric Corporation...........................................    38
    Prepared statement...........................................    40
Timothy R. Hess, Division Vice President, Glatfelter.............    48
    Prepared statement...........................................    50
Robin Mills Ridgway, Director of Environmental Health, Safety and 
  Regulatory Compliance, Purdue University.......................    63
    Prepared statement...........................................    65
Rena Steinzor, President, Center for Progressive Reform..........    67
    Prepared statement...........................................    69
Scott H. Segal, Director, Electric Reliability Coordinating 
  Council........................................................    82
    Prepared statement...........................................    84
    Answers to submitted questions...............................   213

                           Submitted Material

Chart on EPA proposed rules, submitted by Mr. Shimkus............   113
EPA Final Determination, Federal Register, August 9, 1993........   114
EPA Regulatory Determination, Federal Register, May 22, 2000.....   188


  THE AMERICAN ENERGY INITIATIVE, PART 3: TRANSPARENCY IN REGULATORY 
             ANALYSIS OF IMPACTS ON THE NATION ACT OF 2011

                              ----------                              


                        THURSDAY, APRIL 7, 2011

                  House of Representatives,
                  Subcommittee on Energy and Power,
                          Committee on Energy and Commerce,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 1:07 p.m., in 
room 2322 of the Rayburn House Office Building, Hon. Ed 
Whitfield (chairman of the subcommittee) presiding.
    Members present: Representatives Whitfield, Sullivan, 
Shimkus, Walden, Terry, Burgess, Bilbray, Olson, McKinley, 
Gardner, Griffith, Rush, Inslee, Matheson, Green, Capps and 
Waxman (ex officio).
    Staff present: Allison Busbee, Legislative Clerk; Cory 
Hicks, Policy Coordinator, Energy and Power; Ben Lieberman, 
Counsel, Energy and Power; Heidi King; Mary Neumayr, Counsel, 
Oversight/Energy; Jackie Cohen, Democratic Counsel; Greg 
Dotson, Democratic Energy and Environment Staff Director; 
Caitlin Haberman, Democratic Policy Analyst; and Alexandra 
Teitz, Democratic Senior Counsel, Environment and Energy.

  OPENING STATEMENT OF HON. ED WHITFIELD, A REPRESENTATIVE IN 
           CONGRESS FROM THE COMMONWEALTH OF KENTUCKY

    Mr. Whitfield. We will call today's hearing to order. The 
hearing is entitled ``The American Energy Initiative.'' This is 
actually the third hearing in a series that we are having on 
the broad discussion examining the domestic energy resources in 
our diverse energy portfolio.
    Our most recent hearing on Tuesday focused on China, and we 
noted China's economic progress during the past 30 years has 
been possible because of a lot of reasons but one reason that 
they have been really productive is that they are using an 
affordable, secure and abundant fuel source, and that is coal. 
It is not the only reason but one reason, and they are using a 
lot of coal. China has become the largest energy consumer in 
the world, and this has helped China to become the United 
States' chief economic competitor in the global marketplace.
    Unfortunately, in the United States, the use of coal and 
other fossil fuel sources are being threatened by the 
Environmental Protection Agency. Recognizing that they do have 
a responsibility to protect health, I think we are very proud 
that in America we have the highest quality air anywhere in the 
world, but this EPA has been one of the most aggressive. They 
have many regulations in the pipeline and I think it is 
essential that we try to have a balanced approach as we look at 
new regulations. It is likely that some of these rules that are 
coming down, whether it be the Utility MACT, the Boiler MACT, 
the greenhouse gas legislation, the air transport rules, 
whatever it will, we have talked to a lot of utilities, we have 
talked to a lot of businesses, and we know that there will be 
some shutdowns of some electricity and manufacturing facilities 
as a direct result of these rules. Others will be required to 
make costly upgrades to their units because they simply cannot 
comply on the aggressive timelines.
    And then another problem for many groups is just the 
uncertainty that is out there because of what will be required.
    I will say that EPA, for example, the utility rule proposed 
by EPA last month, is estimated to cost the electricity-
generating industry $10.9 billion a year. EPA predicts that 
this rule alone will increase electricity prices as much as 7 
percent in some parts of the Nation. The air transport rule, 
they are expecting that that will increase electricity costs in 
some areas up to 3 percent. And I could go on and on.
    But one of the specific reasons that I am delighted we are 
here today is because of this uncertainty of the EPA and all 
the regulations that they are moving, my colleagues, 
Representative Sullivan of Oklahoma and Congressman Matheson, 
have drafted a legislation called the Transparency in 
Regulatory Analysis of Impacts on the Nation Act. This requires 
a cumulative analysis of certain rules and actions that are 
either issued or planned by the Environmental Protection Agency 
and the forming of an interagency task force.
    [The prepared statement of Mr. Whitfield follows:]

                Prepared statement of Hon. Ed Whitfield

    Today's hearing is the third day of our series on the 
American Energy Initiative. The initiative represents a broad 
discussion that examines the domestic energy resources in our 
diverse energy portfolio. These resources strengthen our 
national security, create jobs, and make energy more affordable 
in our homes and for our businesses.
    On Tuesday, we noted that China's economic progress during 
the past 30 years has been possible because China is using an 
affordable, secure, and abundant fuel source- coal. China has 
become the largest energy consumer in the world, and this has 
helped China to become the United States' chief economic 
competitor in the global marketplace.
    Unfortunately, in the United States, the use of coal and 
other cheaper fuel sources are being threatened by the 
Environmental Protection Agency who have issued a number of 
rules that require a large investment from the energy and 
manufacturing sectors, without fully understanding the economic 
impact and the potential benefits of their rules.
    Because of the uncertainty that the EPA is causing with 
these regulations many of which were issued as a result of 
court cases, I am pleased that my colleagues on the 
subcommittee, Representatives Sullivan and Matheson, have 
drafted the Transparency in Regulatory Analysis of Impacts on 
the Nation Act (TRAIN Act), which would require a cumulative 
analysis of certain rules and actions that are either issued or 
planned by the Environmental Protection Agency (EPA).
    It is likely that these rules will result in the shutdown 
of some electricity and manufacturing facilities. Others will 
be required to make costly upgrades to their units because they 
simply cannot comply on the aggressive timelines.
    EPA has begun, one-by-one, to look at some of the impacts 
of these regulations, and what they have found is startling:
    The Utility Rule proposed by EPA last month is estimated to 
cost the electricity-generating industry $10.9 billion dollars 
a year. EPA predicts that this rule alone will increase 
electricity prices as much as 7 percent in some parts of the 
Nation.
    Later this year, EPA expects to issue the Transport Rule, 
imposing a federally enforceable plan to further regulate 
electricity generating facilities. EPA estimated that this rule 
will cause electricity prices to increase by another 3 percent.
    EPA also proposed to revise the new Ozone standard that was 
just issued in 2008. EPA estimates that revising the Ozone rule 
could cost $90 billion dollars, and that this rule could also 
increase the price of electricity.
    Only a few months ago, EPA issued new National Ambient Air 
Quality Standards for Sulfur Dioxide, emitted from coal-burning 
power plants, and also for Nitrogen Dioxide. Soon, EPA will be 
reviewing revisions to the standard for fine particulate 
matter. These rules could also increase energy prices.
    The analysis by EPA did not look at the cumulative impact 
of the rules, nor did it look at how these rules will affect 
global competitiveness, jobs in all sectors of the economy, and 
the prices that consumers pay for American-made products.
    Today, we will explore the importance of analyzing these 
rules together to understand how they will impact our 
businesses, our consumers, and agriculture, and our global 
competitiveness.
    If we hope to continue to fuel our economy, to light our 
homes and to build American products, we must understand the 
combined impact of these many regulations.
    I thank the witnesses for their willingness to join us this 
afternoon. I look forward to their testimony and answers to 
questions. With that I yield the balance of my time.

    Mr. Whitfield. At this time I would like to recognize for a 
minute-and-a-half Mr. Sullivan, who is one of the authors of 
this legislation.
    Mr. Sullivan. Thank you, Chairman Whitfield. Thank you for 
holding this important hearing on a bipartisan discussion draft 
legislation, the Transparency in Regulatory Analysis of Impacts 
on the Nation Act of 2011, which I will soon introduce along 
with my colleague, Jim Matheson, to address the cumulative 
costs of 10 economically significant EPA regulations and 
actions.
    Many of the EPA's pending regulations and actions will cost 
our Nation billions, impacting everything from energy 
reliability, jobs, manufacturing and global economic 
competitiveness of the United States. The TRAIN Act will 
conduct an in-depth economic analysis so Congress and the 
American people can fully understand how the EPA's regulatory 
train wreck will impact our economy. In fact, eight of the 
EPA's proposed regulations cost a minimum of $1 billion to the 
U.S. economy. The time to address the full economic burden of 
these regulations is now.
    Specifically, the TRAIN Act would require a federal 
interagency analysis of the cumulative impact of certain rules 
and actions of the Environmental Protection Agency on global 
economic competitiveness, energy and fuel prices, and the 
reliability of U.S. bulk power supply. It would also look at 
the impacts of these regulations on State and local 
governments, and jobs. Under this legislation, the interagency 
committee, not just EPA, will analyze the cumulative impacts of 
10 economically significant rules and actions issued by the 
EPA. This analysis will help Congress and federal agencies 
develop a better understanding of how these regulatory policies 
are impacting America's economy as a whole.
    What will these regulations cost? EPA doesn't know and has 
failed to conduct a study of the overall cumulative costs of 
many of their regulations together, which is why this 
legislation is so important. We desperately need an honest 
accounting of EPA's regulations, which this legislation will 
accomplish.
    I look forward to hearing the testimony of our witnesses 
today and I yield back the balance of my time.
    Mr. Whitfield. Thank you, Mr. Sullivan. At this time I 
recognize the gentleman from Illinois, Mr. Rush, for his 
opening statement.

 OPENING STATEMENT OF HON. BOBBY L. RUSH, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF ILLINOIS

    Mr. Rush. Thank you, Mr. Chairman, and I want to thank all 
the witnesses for being here this afternoon.
    Mr. Chairman, we know that since the inception of the Clean 
Air Act, opponents of the bill have been exaggerating the cost 
of implementing the regulations associated with the bill while 
downplaying the benefits that the new rules would bring. I am 
afraid that today's hearing focus on the TRAIN Act may yet be 
another example of this type of shoddy accounting and shoddy 
performance.
    This bill would highlight the costs of implementing certain 
EPA rules but does not take into account all of the benefits of 
these regulations including enhanced public health, increased 
job productivity or lives saved. This bill would also not take 
into account the positive impacts that EPA regulations have had 
on our economy including spurring additional research and 
development of clean energy technologies, instituting higher 
fuel efficiency standards and helping make the country less 
dependent on foreign oil.
    Unfortunately, for many of my colleagues, if the benefits 
of a regulation cannot be monetized such as lives saved or job 
loss prevented, then they are written off as having no economic 
value. At this point, I am not sure that this bill as written 
would really give an accurate cost-benefit analysis of EPA 
regulations. The Office of Management and Budget examined 10 
Clean Air Act regulations finalized in 2008, 2009, and 2010 and 
concluded that all 10 had benefits that exceeded cost by a 
radio of seven to one on average.
    During debate over the Clean Air Act, there were dire 
warnings that environmental regulations would kill jobs and 
lead to outsourcing overseas. Clean Air Act opponents falsely 
predicted that electricity prices would skyrocket if the 1990 
Clean Air Act Amendments were passed when in fact electricity 
prices actually declined in the decade following 1990 by 
approximately 18 percent. While today we will hear the EPA 
regulations will cripple our economy and destroy our 
manufacturing industry, the U.S. Census Bureau conducted an 
annual survey of the U.S. manufacturing sector and found that 
pollution abatement operating costs were only 0.4 percent on 
average of overall manufacturing costs including not just air 
pollution controls but all over abatement costs combined.
    Peer-reviewed articles in top economics journal find little 
evidence that environmental regulations have dampened U.S. 
competitiveness or led to outsourcing. In fact, I must point 
out that EPA implementation of the Clean Air Act and its 
accompanying amendments has been one of the most successful and 
bipartisan environmental laws in American history. 
Additionally, EPA implementation of the Clean Air Act has been 
a stimulus to our economy with estimates that it has generated 
as much as $300 billion of revenue and $44 billion in exports 
while supporting close to 1.7 million American jobs by the year 
2008. When both direct employment and indirect employment are 
taken into account, the environmental protection industry is 
estimated to have created a range of 3.8 million to 5 million 
new jobs.
    Promoting cleaner technology through EPA regulations has 
the benefit of protecting our citizens with cleaner air while 
also creating jobs and investments for our economy.
    So Mr. Chairman, I look forward to today's hearing and 
debate, and I would reserve judgment on this bill with hope 
that we are able to strengthen it moving forward. With that, I 
yield back the balance of my time.
    Mr. Whitfield. Thank you, Mr. Rush. At this time I would 
recognize the gentleman from Illinois, Mr. Shimkus, for 5 
minutes.

  OPENING STATEMENT OF HON. JOHN SHIMKUS, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF ILLINOIS

    Mr. Shimkus. Thank you, Mr. Chairman.
    I think the basic premise of what we are trying to do is 
accept the premise that when you add regulations, you do affect 
jobs, and you need to balance those based upon the 
environmental impact but there will be a job impact, and for 
those who live in southern Illinois, we have yet to recover 
from the 1992 Clean Air Act Amendments.
    Now, I have talked about this numerous times. We can debate 
the beneficial aspects of the Clean Air Act on toxic emittants. 
What our debate now is today is an overly aggressive EPA that 
is going further than is needed to protect public health and 
severely impacting jobs. I have a slide up here which is the 
impending train wreck, and so that is why I support the TRAIN 
Act to stop the impending train wreck. Now, this is just for 
electricity generation, and in 8 years, here is what is coming 
down the track of new rules for ozone, new rules for nitrous 
oxide, a new transport rule, cooling tower or water, 
particulate matter, ash, mercury, carbon dioxide. Does anyone 
really believe that this does not impact jobs and does anyone 
really believe that when you have the multitude of regulations 
that are coming down simultaneous--the President has now agreed 
that it does. In fact, his Executive Order which he submitted 
on January 18, 2011, says that all agencies must take into 
consideration the cumulative regulations on cost and the 
effects on jobs.
    We will submit to you that the EPA has not done that. We 
will submit to you that there hasn't been good interagency 
review on any of these things and we will continue to raise 
this debate that as you increase the regulatory burden--now, I 
will defer to some of my Democratic colleagues who will say 
yes, we are going to create government jobs, we are going to 
create more inspectors, we are going to create--they are not 
going to create private sector jobs. And remember, it is the 
private sector that funds the public sector. So we can grow 
government jobs all we want but as the budget debate that we 
are having today is we can no longer grow government. We really 
have to inspire the private sector to invest capital, create 
jobs and create wealth in this country so we can solve the 
problems of this Nation.
    This impending train wreck is real. This is not fictional. 
No one has made this up. These are all the regs that are coming 
down the pike right now, and if we are to believe the President 
of the United States, he is starting to understand that. And 
now we just have to get his agencies to understand that. That 
is the importance of this bipartisan piece of legislation that 
I hope we continue to have hearings on and move to the floor, 
because as I have said numerous times, and I didn't bring my 
placard of the coal miners who lost their jobs in the last 
round of the Clean Air Act Amendments, that one mine of 1,000 
miners closed never to reopen, never to reopen. It is closed 
today and that rural community, small town, has never recovered 
from the Clean Air Act Amendments of 1992.
    So I would say that it is very important to make sure that 
we continue to have this debate of the cost-benefit analysis 
and the importance about this debate in this hearing is the 
cumulative effect of all these aspects, this train wreck of 
eight different rules and regulations specifically targeting 
coal, electricity generation by coal, raising energy costs, 
killing our coalmines, making energy costs higher.
    With that, I appreciate Mr. Whitfield giving me the time 
and I yield back the balance of my time.
    Mr. Whitfield. Thank you. At this time I recognize the 
gentleman from California, Ranking Member Mr. Waxman for 5 
minutes.

OPENING STATEMENT OF HON. HENRY A. WAXMAN, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF CALIFORNIA

    Mr. Waxman. Thank you very much, Mr. Chairman.
    The legislation before us today has a worthwhile purpose. 
We should always try to understand as fully as possible the 
ramifications of federal laws and regulations. Where 
regulations have a cumulative impact, that should be understood 
as well.
    But it is important that we recognize the potential costs 
of over-analysis. We can reach a point where the cost to the 
taxpayers of additional analysis exceeds its value. Our goal 
should be to strike the right balance. We must also ensure that 
any analysis we require can be credibly executed. Ideally, we 
may want to know the effect of a proposed rule far into the 
future, but that may simply be too speculative an exercise to 
add value to the decisionmaking. And we need to make sure any 
analysis is fair and objective. We can't look at just the costs 
of federal regulation without considering its benefits, just as 
we wouldn't look at only the benefits without considering the 
costs.
    As we consider this proposal from these perspectives, I 
want to flag several issues. From a practical point of view, we 
need to make sure this bill is workable. In its current form, 
the legislation asks 12 Administration officials and one 
industry representative to collect and analyze information 
about actions that may or may not be taken by State and local 
governments, including 110 State and local permitting agencies, 
and project the impacts of those actions 20 years into the 
future. They are supposed to do this without staff, without the 
authority to collect information, and within 30 days.
    Another issue to flag is balance. The draft requires an 
extensive analysis of regulatory costs, but we need to 
understand the benefits as well so Congress and the public get 
a balanced assessment of the value of the regulations. Further, 
we need to be mindful not to duplicate what is already being 
done. For every final rule covered by this act, the EPA has 
prepared a Regulatory Impact Analysis to satisfy the 
requirements of OMB policy, executive orders, and statutes 
including the Administrative Procedure Act, the Paperwork 
Reduction Act, the Regulatory Flexibility Act and the Small 
Business Regulatory Enforcement Fairness Act. We need to make 
sure we are not requiring a redundant analysis.
    Finally, this legislation creates new requirements for the 
executive branch without providing a specific authorization. It 
also does not offset these new requirements by relieving the 
agencies of other offsetting obligations.
    These are some of the issues that will be on my mind as we 
consider this bill today and in the weeks ahead. I look forward 
to hearing from today's witnesses and I hope this legislation 
can be improved through the committee process.
    Thank you, Mr. Chairman. I yield back my time.
    Mr. Whitfield. Thank you, Mr. Waxman. And at this time I am 
going to introduce the panel of witnesses and we are going to 
start with Mr. Cauley, who will be first. But before we do 
that, I do want to introduce the panel and thank you again for 
being with us to help us analyze where we are today.
    First, we have Mr. Gary Cauley, President and CEO, North 
American Electric Reliability Administration. Second, Mr. Eric 
Schaeffer, Executive Director of the Environmental Integrity 
Project. Third, we have Mr. Mark Bailey, who is the President 
and CEO of Big Rivers Electric Corporation. Fourth, we have Mr. 
Timothy Hess, who is the Division Vice President of Glatfelter. 
We have Dr. Robin Ridgway, who is the Director of Environmental 
Health, Safety and Regulatory Compliance at Purdue University. 
Sixth, we have Ms. Rena Steinzor, who is the President of the 
Center for Progressive Reform, and then seventh, we have Mr. 
Scott Segal, who is the Director of the Electric Reliability 
Coordinating Council.
    So thank you all for being with us. Each one of you will be 
introduced for a 5-minute statement, and there is a little 
panel on the table there which hopefully you can see. It will 
show you a yellow light when you have a minute left and red 
when your time is expired.
    So Mr. Cauley, you are recognized for 5 minutes for your 
opening statement.

   STATEMENTS OF GERRY CAULEY, PRESIDENT AND CHIEF EXECUTIVE 
 OFFICER, NORTH AMERICAN ELECTRIC RELIABILITY ADMINISTRATION; 
  ERIC SCHAEFFER, EXECUTIVE DIRECTOR, ENVIRONMENTAL INTEGRITY 
PROJECT; MARK A. BAILEY, PRESIDENT AND CHIEF EXECUTIVE OFFICER, 
BIG RIVERS ELECTRIC CORPORATION; TIMOTHY R. HESS, DIVISION VICE 
    PRESIDENT, GLATFELTER; ROBIN MILLS RIDGWAY, DIRECTOR OF 
ENVIRONMENTAL HEALTH, SAFETY AND REGULATORY COMPLIANCE, PURDUE 
 UNIVERSITY; RENA STEINZOR, PRESIDENT, CENTER FOR PROGRESSIVE 
    REFORM; AND SCOTT SEGAL, DIRECTOR, ELECTRIC RELIABILITY 
                      COORDINATING COUNCIL

                   STATEMENT OF GERRY CAULEY

    Mr. Cauley. Thank you, and good afternoon, Chairman 
Whitfield, members of the subcommittee and fellow panelists. My 
name is Gerry Cauley. I am President and CEO of the North 
American Electric Reliability Corporation. I am a graduate of 
the U.S. Military Academy, former officer in the U.S. Army 
Corps of Engineers, and I have over 30 years' experience in the 
electric power industry.
    I have with me today Vice President and Director of 
Reliability Assessments, Mark Lobby, and I would ask perhaps if 
there are technical questions on our report--he was the author 
of the report--I may request permission to call on him as 
needed.
    There are two words that resonate through everything that 
NERC does: reliability and accountability. Our mission is to 
ensure the reliability of the bulk power system through our 
mandatory standards, through our assessments and by promoting a 
culture of a learning industry. We are accountable to the 
government, to industry, and ultimately to consumers for 
ensuring a reliable bulk power system. By assessing and 
analyzing historic current and future conditions as well as 
emerging issues affecting the bulk power system reliability, 
NERC develops vital information for managing current and future 
reliability risks and for improving reliability performance.
    In the nearly 5 years since NERC was certified as the 
Electric Reliability Organization by the Federal Energy 
Regulatory Commission, NERC has made significant progress, 
particularly in the area of reliability assessments. NERC 
produces a yearly long-term report with a 10-year horizon, two 
annual seasonal reports for the winter and summer seasons, and 
special assessments as needed. These reliability assessments 
are conducted to provide an independent evaluation of 
industry's plans to ensure future reliability of the bulk power 
system and to identify trends, emerging issues and potential 
concerns.
    In October 2010, NERC released a report entitled ``2010 
Special Reliability Scenario Assessment: Resource Adequacy 
Impacts of Potential U.S. Environmental Regulations. The focus 
of this assessment was to quantify the potential impacts of 
pending and planned EPA regulations on future resource 
adequacy. The report was intended to inform NERC stakeholders, 
industry leaders, policymakers, regulators and the public so 
that sound and informed decisions can be made. It is NERC's 
responsibility as the ERO to assess and highlight bulk power 
system reliability considerations resulting from emerging 
system conditions or external events to ensure that suitable 
plans are put in place to ensure reliability.
    NERC's scenarios addressed four rules under consideration 
at the time of our assessment: section 316(b), the MACT 
standard, CATR, and CCR. We evaluated both strict and moderate 
cases for each rule to provide sensitivities to the assumptions 
that we used. Because more than one regulation pertains to any 
given power plant, NERC performed an economic assessment of 
these regulations both individually and cumulatively in the 
aggregate. Some of the findings of the assessment based on the 
rules under consideration during our study include for the 
strict case, for the strict scenario, up to a 78-gigawatt 
reduction in coal-, oil-, and gas-fired generation capacity 
could be seen based on resource plans existing at the time of 
the study. Section 316(b) would have had the greatest potential 
for impact on reserve margins.
    The EPA regulations, if implemented as planned or proposed 
at the time we completed our assessment, would create a need 
for prompt industry response and action to address future 
resource requirements. Without attention to these findings, the 
study identified bulk power system reliability impacts 
resulting from reduced reserve margins in certain areas of the 
United States. We believe the potential reliability 
implications of these regulations can be managed through 
timing, tools, and coordination. The timing of the industry's 
obligations for compliance with environmental regulations is 
the most important consideration. The industry needs both time 
and certainty of its obligations in order to act and make 
informed decisions.
    NERC identified a number of tools the industry and 
regulators have for mitigating the potential reliability 
impacts such as advancing in-service dates of future generation 
and implementing more demand response and energy efficiency. 
The EPA, FERC, the Department of Energy and State regulators 
should employ the entire array of tools at their disposal to 
moderate reliability impacts including granting extensions 
needed to install emissions controls and add additional 
supplier demand resources as needed.
    Thirdly, industry coordination will be vital to ensure 
retrofits are completed in a way that addresses all of the 
operational challenges. Since our study, the EPA has issued 
proposed rules for Utility MACT and 316(b). NERC is reviewing 
the proposed rules, and if there are significant differences 
from our 2010 report, an assessment would likely be provided in 
our annual assessment released in November. NERC will continue 
to monitor the implications of the EPA regulations as greater 
certainty emerges around these industry obligations and our 
requirements.
    I thank you for your interest in NERC's findings and its 
report, and I sincerely appreciate your interest in reliability 
and the opportunity to answer questions today. Thank you.
    [The prepared statement of Mr. Cauley follows:]

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    Mr. Whitfield. Thank you very much.
    You are recognized, Mr. Schaeffer, for 5 minutes.

                  STATEMENT OF ERIC SCHAEFFER

    Mr. Schaeffer. Thank you, Mr. Chairman and members of the 
committee. I am Eric Schaeffer, Director of the Environmental 
Integrity Project. We advocate for more effective enforcement 
of environmental law, and I also served with the EPA as head of 
the Office of Civil Enforcement until 2002.
    I would like to briefly summarize my testimony and then 
maybe cover a couple of points I have heard so far in the 
hearing. The regulations that are the subject of the bill, the 
object of the bill, have already been exhaustively analyzed. 
The Regulatory Impact Analyses are dense documents that are 
available for anybody to review, and if people want to 
aggregate those costs, the information is there.
    I do understand the importance of bringing jobs back to 
communities and holding on and hopefully rebuilding in the 
United States. That is obviously a very important goal. I have 
heard a lot of mention of balance, and I have to say that a 
bill that would require the government to consider the costs 
but not the benefits of regulations really doesn't seem to meet 
a balance test, at least on the face of it, so I hope you will 
consider that as you proceed.
    The second point I want to make is, we have heard about 
train wrecks. I would like to suggest that these rules are more 
like a set of creaky handcarts that are finally lumbering 
across the finish line, in some cases decades after they were 
supposed to have been put on the books, and I will give you 
some examples, and this gets to the issue of time, time, we 
need more time. Again, these laws have been on the books 
forever. We have very competent counsel for industry that can 
read the deadlines and understand what it is they have to do.
    EPA made a decision to regulate hazardous air emissions 
from power plants in December of 2000. Under the Clean Air Act, 
those standards should have met no later than December of 2005. 
We are now looking at compliance in 2015, so that is 9 years 
later. Industrial boilers, deadline 2004, when the law was 
written by Congress. Emissions limits will have to be met in 
2014, so that is about 10 years after the congressional 
deadline. In 1984, you, the Congress, told EPA to do something 
about coal ash. We are still waiting for an answer 26 years 
later. The intake rule that we are talking about, when were 
those standards due? Nineteen seventy-seven, back when I still 
had hair on my head and was just getting out of school. So 
these are very old rules, and the image of speeding trains, 
anybody who sort of ground away on these regulations over the 
decades just doesn't fit reality. The industry has had lots of 
time to plan.
    The reason I think you are seeing them come back and ask 
for this re-analysis of what has already been analyzed is these 
rules have all gone to court or will go to a court, in a couple 
cases have gone to court, the industry has lost. The court has 
told the EPA what it has to do and EPA is doing it. So in the 
end, if you want to stop these actions, you need to change the 
laws because what EPA is doing is executing the laws that you 
gave them and doing just what the courts have told them to do. 
If anybody thinks that is incorrect, they can take the agency 
to court, as they do almost every day, and try their luck. And 
in several cases here, the industry has done that and lost.
    I should add that some of these decisions have come from 
very conservative judges who believe in taking literally what 
Congress tells the agency to do. So if you think the balance is 
wrong, if you think there is too much emphasis on health and 
not enough on cost to industry, then those laws can be changed. 
In that case, we will have an open debate. Everybody can see 
what we are doing. You can decide whether approximately 9,000 
to 23,000 premature deaths a year counts more or less than the 
economic cost of this legislation on particular industries. And 
I respect that these are very difficult choices. They are very 
tough. Maybe they deserve to be debated and I hope they will 
be.
    Last point on jobs. I hope you will consider the impact of 
cleaning up these plants on employment. We have had lots of 
public releases from the power industry bragging about the 
number of jobs created every time one of these plants is 
cleaned up. From Synergy, this will create more than 1,000 
construction jobs in Indiana and Ohio to put a scrubber on. 
From DTE in Michigan, the $600 million project will create 900 
jobs and be one of the largest construction projects in 
Michigan over the next few years. So there is work involved in 
complying with these laws and not just government inspectors 
but people on the ground, and I hope you will consider that 
also.
    Thank you for my time.
    [The prepared statement of Mr. Schaeffer follows:]

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    Mr. Whitfield. Thank you, Mr. Schaeffer.
    Mr. Bailey, you are recognized for 5 minutes.

                  STATEMENT OF MARK A. BAILEY

    Mr. Bailey. Thank you. Good afternoon, Mr. Chairman and 
members of the committee. My name is Mark Bailey and I am the 
President and CEO of Big Rivers Electric Corporation. I 
appreciate the opportunity to discuss Big Rivers' assessment of 
the impacts of the proposed EPA regulations on electric 
reliability, the cost of electricity and our customers.
    Big Rivers is a not-for-profit cooperative, and we generate 
and transmit power, and we are located in western Kentucky. The 
three distribution cooperatives who own us serve collectively 
113,000 customers, both residences and businesses. We are a 
small company. We own 1,500 megawatts of generating capacity, 
and 97 percent of the electricity we produce comes from coal-
fired generators.
    We believe that we have taken a proactive approach in 
meeting our environmental obligations by equipping essentially 
our entire fleet with SO2 and NOX 
controls. However, compliance with pending EPA regulations 
identified in section 3(e) of the legislation before this 
committee will be very difficult for us in the near term due to 
the piecemeal and staggered approach the EPA is using in 
issuing these contemplated regulations. At this time affected 
electric utilities do not have all the information needed to 
make informed and cost-effective decisions.
    While the proposed clean air transport rule and the 
hazardous air pollutants rules may enable electric generators 
to use some common control equipment to satisfy both of those 
rules, we will still be waiting for the coal combustion 
residual rule to come out a little later, and dependent on what 
is required there, whether ash is classified as hazardous or 
not, can tip the scales in one fashion or another so far as 
what we would do to comply with the two earlier rules that need 
to be complied with on an earlier date. So it is possible that 
you have to make a decision and gamble on doing the right thing 
to comply with the two earlier deadline rules and hope that 
doesn't change when the final rule comes out. Or you can gamble 
and wait and see what the entire rules look like but then you 
run the risk of not meeting the earlier deadline requirements.
    In addition to this concern, compliance timelines are 
unreasonably short and virtually impossible to achieve. Because 
of this, many utilities will be racing simultaneously to 
comply, which will exacerbate the cost concerns as we compete 
for scarce resources to get all these facilities built in a 
very narrow window.
    The cumulative effect of EPA's next series of regulations 
will result in significant financial and economic impacts to 
western Kentucky. A particular concern for our region and 
perhaps the entire Nation is the potential loss of aluminum 
smelters and other strategic electric-intensive industries due 
to electric rate increases. Seventy percent of the energy that 
Big Rivers produces is used by two of only four aluminum 
smelters still operating in this country at 100 percent 
capacity. Not only do the smelters employ 1,400 people and pay 
relatively high wages, the satellite industries in our region 
that serve them collectively employ all together 5,000 
individuals and the annual payroll is about $200 million, and 
there is an additional $17 million in State and local taxes.
    To help put this in context, over the past 5 years at least 
12 U.S. aluminum smelters have shut down and five have 
curtailed their operations. These actions are largely 
attributable to rising electricity rates along with global 
competition. Any significant increase in rates will threaten 
the ability of these smelters to continue operating in Kentucky 
and perhaps the rest of the country as well. I believe the 
future impact of the EPA's proposed regulations will ultimately 
increase electric cost, could negatively affect reliability, at 
least in the short term, may reduce employment and weaken the 
global competitiveness of the American manufacturing industry.
    In closing, Big Rivers estimates compliance costs with the 
impending EPA regulations will increase our rates 40 percent at 
the wholesale level by 2015. The piecemeal approach that EPA is 
taking in issuing its regulations and then the staggered and 
compressed time frame to comply could result in unnecessary and 
additional spending and suboptimal results. At a minimum, we 
respectfully request that the committee consider delaying 
implementation of EPA regulations until all planned regulations 
have been promulgated so that affected utilities can analyze 
them on a holistic and informed basis. Thank you.
    [The prepared statement of Mr. Bailey follows:]

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    Mr. Whitfield. Thank you, Mr. Bailey.
    We do have votes on the floor, unfortunately. We like to 
have these hearings in the morning so we are not detaining 
everyone, but Mr. Hess, we are going to go on and get your 5-
minute opening statement and then we are going to recess. I 
will find out how many votes we have. But you are recognized 
for 5 minutes.

                  STATEMENT OF TIMOTHY R. HESS

    Mr. Hess. Thank you, Chairman. Chairman Whitfield, Ranking 
Member Rush, members of the subcommittee, my name is Tim Hess. 
I am the Vice President of Engineered and Converting Products 
with Glatfelter, a specialty paper company that has been in 
business since the Civil War. I am a graduate of the United 
States Military Academy, and I have been in the paper business 
for 16 years.
    I am testifying today on behalf of the American Forest and 
Paper Association. Thank you for the opportunity to discuss the 
challenges presented by the cumulative impact of the EPA 
regulations on manufacturers. We applaud this subcommittee and 
others for taking seriously the oversight of the laws that have 
been enacted. The forest products manufacturing supply chain 
will continue to adapt to well-reasoned regulations that are 
affordable and achievable. We are proud of our environmental 
stewardship but we cannot respond to regulations in a vacuum. 
Businesses in our sector must consider the global competitive 
environment in which they operate. They must compete for 
capital globally and have the time needed to build new 
regulatory requirements into the capital planning process. They 
must also be able to rely on the government so that once a 
regulation is in place, it will not be selectively enforced or 
changed within a short time frame.
    Paper and wood products manufacturers are facing over 20 
major regulations from EPA's Clean Air Act program alone. The 
pace and volume of regulation is not sustainable for the 
agency, the States, the companies that are required to meet 
them, or the Congress whose obligation it is to provide 
oversight.
    I would like to call your attention to the diagram that I 
included with my written testimony of the clean air regulations 
in the pipeline that will affect the forest products industry 
manufacturing facilities. It is similar to the train wreck 
picture that was previously shown. A picture is worth a 
thousand words, and this picture gives you an idea of the 
complicated maze of current EPA regulatory activity and doesn't 
even take into account the hundreds of other regulations that 
we comply with every day.
    As detailed in my written statement, this type of 
regulatory environment increases our costs, makes us less 
competitive in a global basis, and ultimately results in lost 
jobs. The forest products industry, like so many other 
manufacturing industries, has been hard hit by the economic 
crisis. Since 2006, when the housing downturn began, the forest 
products industry has lost 31 percent of its workforce, nearly 
400,000 high-paying jobs, largely in small rural communities 
that can least afford to lose them. The closure of a mill in a 
small town has a significant ripple effect when that mill is 
the largest employer and a major contributor to the local taxes 
and community programs.
    Here are a few of the many regulations we are concerned 
about: Boiler MACT. EPA's recently finalized Boiler MACT rule 
will cost our industry alone well over $3 billion and continues 
to ignore what real-worst best-performing boilers can achieve 
over the range of normal operating conditions, and while 
Congress authorized EPA to adopt a health-based performance 
approach to target controls for certain emissions below the 
level of concern, EPA decided not to use this authority and 
reversed its previous precedent. EPA is also considering 
redoing the pulp and paper MACTs issued a decade ago, even 
though MACT is supposed to be a one-time program, and we are 
concerned that this could add an additional $4 billion in 
capital costs beyond boiler MACT.
    The National Ambient Air Quality Standards, known as NAAQS, 
program has greatly reduced emissions of criteria pollutants. 
Yet further tightening is underway. Even before the latest 
ozone standard has been fully implemented, EPA is tightening it 
further, 2 years ahead of the usual statutory schedule. 
Collectively, the revisions of all the NAAQS rules could cost 
the forest products industry over $8 billion in capital costs. 
These constantly changing air quality regulations do not allow 
me and my management team to make rational, long-term decisions 
about capital spending, particularly for projects that do not 
return profits to the bottom line.
    We applaud this subcommittee's efforts to shine a light on 
the impacts of the EPA regulations. As recognized in the TRAIN 
Act, agencies typically look at any given regulation in a 
stovepipe and fail to consider the cumulative regulatory impact 
on competitiveness and jobs. Accordingly, the subcommittee may 
want to consider the impacts of regulation on the loss of human 
capital such as when workers' skills are no longer marketable 
because manufacturing are lost in the United States. This could 
include real costs such as lost wages and the cost of new job 
training, and they could be added to the compliance costs in 
the analysis.
    In summary, we know that the current wave of pending new 
regulations is unsustainable. Living with such an uncertain 
regulatory environment not only costs current jobs but also 
prevents new jobs from being created. Companies frequently find 
themselves tangled in a web of rules that result in a decision 
not to make an investment because of uncertainty about the 
regulatory process or they decide to invest overseas. Others 
rule the decide hoping that the rule they are making decisions 
under today will still be in place when the project is 
complete. Investments in energy efficiency projects, mill 
modernization programs and new biomass boilers have already 
been impacted by Boiler MACT and NAAQS. Unfortunately, it is 
easier to see the jobs that are lost after the fact but the 
greatest damage may be the unknowable: the projects never 
built, the products never made, the jobs never created or the 
entrepreneur ideas drowned in a sea of red tape.
    Thank you for taking the time to listen to some of the many 
regulatory challenges the forest products industry is facing.
    [The prepared statement of Mr. Hess follows:]

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    Mr. Whitfield. Mr. Hess, thank you, and I apologize once 
again. We do have five votes, and I expect it will probably 
take 45, 50 minutes at a minimum. So there is a deli 
downstairs, there is a restaurant, so I hope that you all can 
find something to entertain yourselves until we get back.
    But once again, thank you. It is 10 to 2:00, so we will 
certainly try to be back at about 15 to 3:00.
    [Recess.]
    Mr. Whitfield. We will call the meeting back to order, and 
Dr. Ridgway, you are recognized for 5 minutes for your opening 
statement.

                STATEMENT OF ROBIN MILLS RIDGWAY

    Ms. Ridgway. Chairman Whitfield, Ranking Member Rush, 
members of the committee, good morning, or good afternoon, 
rather. Thank you for inviting me here to testify today. My 
name is Robin Mills Ridgway. I am Director of Environmental 
Health and Safety Regulatory Compliance with physical 
facilities at Purdue University in West Lafayette, Indiana. I 
hold a Ph.D. in environmental engineering from Purdue, and I am 
a licensed professional engineer in Indiana. I serve as a 
resource for environment regulatory compliance at Purdue, and 
in particular I analyze the impacts of current and upcoming 
regulations on Purdue operations and proposed projects. I also 
participate in rulemaking activities at the State and federal 
level to assist the university with planning.
    Purdue University in West Lafayette is like a small city. 
With 47,000 students and an expansive research infrastructure, 
the university has many support and research activities that 
are covered by EPA regulations. Just a quick list of some of 
the peripheral areas that I also oversee, we have a 1,600-acre 
multi-species confined-animal feed operation, which is covered 
by EPA regulations. We have a federally permitted hazardous 
waste treatment, storage and disposal facility that handles 
188,000 pounds of hazardous waste annually. We have a campus 
stormwater permit that covers runoff from campus as well as we 
own and operate a public water supply on campus.
    One of the other facilities on campus that I am very 
involved in is our combined heat and power facility. It is a 
41-megawatt combined heat and power facility that is primarily 
coal-fired and it supplies nearly all of the campus heating 
steam, chilled water, and on average 60 percent of the campus's 
electricity needs. This highly efficient facility holds a point 
source MPDS permit and we also have several, many Clean Air Act 
regulations that apply to us, and I will just list these off. 
The New Source Performance Standards, the Boiler MACT, both of 
them, the one that came and then was vacated and then came 
again, the Rice MACT that covers emergency generators, 
greenhouse gas reporting, greenhouse gas permitting as part of 
the PSD program, and Purdue's utility plant boilers are also 
regulated as non-electric utility generating units, non-EGUs, 
under the NOX budget training program, which is now 
the vacated CARE, which will soon be the transport program, so 
it has sort of evolved.
    EPA has also just recently proposed a coal ash regulation, 
and although they say quite clearly in the regulation that is 
targeted at electric utilities, I think we all know that 
industrial facilities will also be pulled under this regulation 
as the States move to implement the program. I don't believe 
that they will differentiate from source.
    A core part of my position is monitoring regulatory 
developments and apprising the university administration of 
impacts or more often projected impacts for planning purposes. 
Because of our long planning timelines, I am frequently asked 
to look out 5 and sometimes 10 years. I try to predict with as 
much certainty as possible to make sure the administration 
understands the full spectrum of potential impact. As 
uncertainty increases, the impact spectrum broadens. The 
projected impact of layered regulations then becomes a driving 
factor in decision-making, potentially causing our 
administration to delay a decision until certainty is reached.
    We recently canceled a clean coal boiler project that is a 
good example of this potential outcome. The project followed a 
multiple-year planning timeline, which is typical of large 
capital projects at a State university. By the time the project 
was to be commenced, the regulatory landscape had changed and 
the likelihood of future regulations caused the board of 
trustees to actually cancel the project in February of 2011.
    The piling on of regulations impacts continuance and 
expansion of highly efficient district energy, whether it be 
biomass, clean coal or natural gas, combined heat and power. 
Protection of the environment and enhancement of energy supply 
takes a menu of approaches. Each facility and location is 
different.
    The planning challenges associated with a rapidly changing 
regulatory landscape are not unique to a university. However, 
universities cannot relocate or consolidate operations like a 
for-profit manufacturer might be able to nor are we able to 
pass the costs on to a customer. Our students are our 
customers, so the added costs of compliance or additional 
purchased utilities fall back on the taxpayers. We are 
committed to providing an educational foundation for our 
students as economically as possible, and the key to good 
fiscal stewardship is careful long-term planning.
    Mr. Chairman, I thank you for this opportunity to testify 
and would be pleased to answer any questions that the committee 
may have.
    [The prepared statement of Ms. Ridgway follows:]

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    Mr. Whitfield. Thank you, Dr. Ridgway.
    Ms. Steinzor, you are recognized for 5 minutes.

                   STATEMENT OF RENA STEINZOR

    Ms. Steinzor. Mr. Chairman, Ranking Member Rush and members 
of the subcommittee, I appreciate the opportunity to testify 
today on the discussion draft of the Transparency in Regulatory 
Analysis of Impacts on the Nation Act of 2011, known as the 
TRAIN Act. This legislation would convene a Cabinet-level 
committee to conduct a breathtakingly ambitious analysis of how 
regulations required by Congress might affect energy prices in 
the United States in 2030. A crystal ball might well prove more 
effective in driving these estimates.
    For reasons that are left a mystery but seem amazingly 
misguided, the legislation ignores the benefits that would be 
achieved by the targeted regulations. Rules to protect public 
health and the environment most definitely do not have the 
effect of sweeping money into a pile and setting it on fire. 
Rather, they save the lives of millions of people, prevent many 
more millions from getting sick or becoming sicker, and 
preserve the irreplaceable natural resources without which 
human life would be impossible. Omitting benefits is akin to 
assessing our country's wellbeing by carefully counting its GDP 
in dollars while ignoring whether Americans have a life 
expectancy over 50, are well enough to go to work or school, 
are able to take care of each other, enjoy our leisure or leave 
a sustainable for our children. The Clean Air Act Amendments 
targeted by TRAIN are uniformly recognized as a wonderful 
economic bargain by experts from the right to the left of the 
political spectrum. According to EPA's very conservative 
numbers, clean air rules saved 164,300 adult lives in 2010 and 
will save 237,000 lives annually by 2020.
    Last but not least, the TRAIN Act targets proposed Coal Ash 
Rule. My testimony includes a chart showing the coal ash 
disposal sites in the districts of the members of this 
subcommittee, and I urge you to take a look at it. Some of you 
have coal sites that are high hazard.
    It is very ironic that most of the witnesses on this panel 
today have been talking so much about uncertainty. The TRAIN 
Act is funded on uncertainty and unknowability. Most of the 
calculations must be completed by August 2012, a date preceding 
by a few weeks the national Presidential elections. The studies 
are so ridden with uncertainty that their numbers would be not 
just meaningless but deceptive. The only silver lining in this 
quixotic effort this that it should remain Americans of the 
hard lesson we learned when Wall Street crash alleging large 
number derived from complex calculations as facts, then 
wrapping them up in a glossy binder to make the numbers or the 
facts either true or reliable. Imagine for a moment that you 
could muster a meeting of the most sophisticated and 
knowledgeable experts on global oil prices. Throw in climate 
scientists, military experts, geologists and the leaders of the 
10 countries with the largest deposits of oil, natural gas and 
coal in the world. Now ask what the wholesale and retail costs 
of these fuels will be in 2030. You would get laughter, shrugs 
and protestations of disbelief that you are serious. Over the 
last several weeks we have seen popular uprisings course across 
the Middle East sending gas prices through the roof. No one 
knows how these deeply rooted social cataclysms will play out, 
and they are likely to play a far more significant role in 
determining energy prices 10 or 20 years hence than the 
projected costs of an EPA regulation that has not even been 
proposed yet, and this legislation would cover rules that have 
not even been proposed yet.
    The legislation makes the job of knowing the unknowable 
impossible, and it is also likely to result in exceptionally 
burdensome requirements on the private sector and State and 
local governments. In fact, I would call it in some ways the 
great grandmother of all unfunded mandates. Only private 
corporations have the information that is needed under this 
regulation to determine what projects have been organized and 
are proposed that will be affected by changes in energy prices, 
and the studies that are required cannot be completed without 
their help. Thank you.
    [The prepared statement of Ms. Steinzor follows:]

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    Mr. Whitfield. Thank you.
    Mr. Segal, you are recognized for 5 minutes.

                    STATEMENT OF SCOTT SEGAL

    Mr. Segal. Thank you, Mr. Chairman, members of the 
subcommittee. I am Scott Segal, and I am Director of the 
Electric Reliability Coordinating Council. I am also a partner 
at the law firm of Bracewell & Giuliani. It is my pleasure to 
be with you. I believe it is still this afternoon.
    The power sector on whose behalf I am here today faces a 
wave of overlapping regulations. Even EPA admits that the 
Utility MACT, for one example, costs at least $10 billion 
annually, making it one of the most expensive rules in the 
history of the agency. Credible analyses have found cost 
estimates literally an order of magnitude higher but of 
interest to this subcommittee, while Utility MACT is quite 
serious, is that EPA also has or will promulgate a broad series 
of new rules in the immediate future with compliance deadlines 
on or before 2015. These rules includes greenhouse gas 
limitations, ash and other residual limitations, National 
Ambient Air Quality Standards for SO2, 
NOX, SOX, ozone, particulate matter, a 
new transport rule, cooling water intake rule under 316(b), and 
discharge-limiting effluent standards under the Clean Water 
Act. Most Administrations feel like it is a good day at the job 
when they seek to change one National Ambient Air Quality 
Standard or maybe two over the course of a 4- or 8-year 
Administration, and that is regardless of whether we are 
talking Democratic or Republican Administrations. This 
Administration thinks it is a good day at the job to do five 
simultaneously. So it is very important that we take a look at 
overlapping impacts.
    A recent ICF International analysis of pending and 
promulgated EPA regulations for the power sector, which I have 
asked to have placed in the record, shows that when a complete 
environmental future is analyzed, over 150 gigawatts of coal, 
half of the U.S. fleet, are at risk of being unavailable in 
2015 for needed energy and required reliability due to 
insufficient time to install controls or replace generation. 
The ICF data when subjected to further economic analysis and 
controlled for appropriate sensitivities yields substantial net 
impacts on job creation in the United States. U.S. employment 
income is estimated to drop by an amount equivalent to the 
earnings of 2 million to 2.5 million full-time workers. This 
estimate includes an estimated increase in offsetting 
compliance-related employment equivalent to about 200,000 to a 
million full-time jobs in the early years of implementation. 
Without the offsets, the estimated reduction in worker income 
would be as high as 3.5 million jobs from the overlapping 
regulations.
    As further frame of reference for what these overlapping 
regulations place at risk, we looked at Penn State's estimate 
of the total economic footprint of coal-fueled electric 
generation by 2015, they found that would be about $1 trillion, 
$362 billion in annual household incomes, and about 6.8 million 
jobs.
    The impact of increased costs on retail and businesses is 
particularly troubling. Again, referencing the ICF data, 
particularly in certain regions, retail electricity price is 
estimated to increase by 20 to 25 percent. The average U.S. 
household is estimated to lose buying power of up to $500 per 
year. Consumer energy cost impacts are likely to be regressive 
with one-quarter of Americans already reporting that they had 
trouble paying for power, and for minority communities and for 
the elderly, the situation is even worse.
    Certain sectors of the economy have become increasingly 
sensitive even to minor changes in the cost of electricity. You 
heard from the university a moment ago but the health care 
sector also finds that provisions of almost services are 
related to energy costs with hospitals using twice as much 
electricity per square foot than comparable office space, and 
this is not a highly hypothetical EPA air model. This is the 
bills that our health care sector actually pays.
    Some have claimed that the suite of power sector 
regulations will stimulate new investment in technology of 
various descriptions, so-called green jobs. However, the data 
cited above demonstrates these are temporary job gains and 
still create a deficit of up to 2.5 million jobs. But in any 
event, it would be foolish in the extreme to believe that heavy 
regulatory burdens have ever been truly conductive to business 
confidence, investment or job creation. Recent experience in 
Europe demonstrates that for every four green jobs, nine 
higher-paying industrial jobs are lost.
    By 2015, the coal-fired power plants in the United States 
will have invested as much as $125 billion in advanced emission 
control technologies and success to date has been clear. The 
U.S. electric power sector has reduced its emissions of 
NOX, SOX and a 40 percent reduction in 
mercury. However, as in 1998, the agency still can find no 
direct additional or incremental health benefits associated 
with reduction of non-mercury HAPs, which is the major cost 
driver within the Utility MACT proposal.
    What can be done? President Obama himself in his January 
Executive Order called upon agencies to take into account the 
costs of cumulative regulations, which is precisely what the 
TRAIN Act does. It will be an excellent tool to prevent EPA 
from hastily adopting guidelines and regulations without 
careful consideration of their actual benefits and economic 
impacts. If it is true that these rules are such a great 
bargain, then nobody on this panel should have anything to fear 
from looking at their cumulative economic impact. To the extent 
people oppose looking at cumulative economic impact, I would 
suspect they believe the number will be quite high. Thank you 
very much.
    [The prepared statement of Mr. Segal follows:]

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    Mr. Whitfield. Thank you, Mr. Segal, and I thank all of you 
for your opening statements.
    First question I would just ask all of you across the 
board, you can give me a yes or no, recognizing that EPA does a 
very thorough job in its analysis looking at health care 
benefits, I would ask each one of you, do you think it would 
beneficial to have an analysis made by some independent agency 
of the cumulative economic impact of regulations coming out of 
EPA that are identified in this legislation. Mr. Cauley?
    Mr. Cauley. Chairman Whitfield, I do believe the electric 
power industry would benefit from comprehensive review. One of 
the challenges of maintaining a long-term reliable bulk power 
supply is having some amount of certainty to commit resources. 
It takes sometimes 4, 6, 8 years to site and build generation--
--
    Mr. Whitfield. But you believe it would be a benefit?
    Mr. Cauley. Yes.
    Mr. Whitfield. OK. Mr. Schaeffer?
    Mr. Schaeffer. I can't object to the concept. Intuitively 
it makes sense. The question is whether it will delay issue of 
rules that have been overdue for so many years, and whether the 
cumulative benefits will also be considered.
    Mr. Whitfield. Thank you. Mr. Bailey?
    Mr. Bailey. Yes, I do, sir.
    Mr. Whitfield. Mr. Hess?
    Mr. Hess. Yes, sir, I do.
    Mr. Whitfield. Dr. Ridgway?
    Ms. Ridgway. Yes, I do.
    Mr. Whitfield. Ms. Steinzor?
    Ms. Steinzor. No, sir.
    Mr. Whitfield. Mr. Segal?
    Mr. Segal. Yes, and I just wanted to say one thing about 
whether or not it can be done and whether it would be too hard 
to do. I have talked to former EPA air administrators and 
former general counsels of the agency who assure me this type 
of work is available to them, could be done and we could 
proceed and do this work, but we don't do it.
    Mr. Whitfield. Thank you. Now, Mr. Bailey, we have heard 
some comments today which is understandable that any time 
industry hears about a regulation they are going to be impacted 
by, they immediately start complaining about the cost of this 
new regulation and the jobs that will be lost, and paint a very 
sad scenario. You are out there every day dealing with this 
issue. It is your responsibility to run this electricity 
company producing electricity. With the unprecedented activity 
of this EPA, one regulation right after the other, why is it so 
difficult for you as a CEO responsible to comply with these 
kinds of regulations? Why is it so difficult?
    Mr. Bailey. Well, clearly we want to keep the rates low for 
all our customers. We are non-profit, so we are not trying to 
make profits on increasing rates. But we are rate-regulated in 
Kentucky, cooperatives are. We are regulated by the Public 
Service Commission and rates are not adjusted until after you 
make the investment, and if you make investments based on what 
you know at one point in time and it is later found as 
different rules have come out that that was an imprudent 
decision, it is impossible to recover all that investment, if 
any of it. So clearly that would be money that was not well 
spent from that standpoint.
    Mr. Whitfield. So one of your big concerns is you invest 
money and then you realize that the regulation has been changed 
again or it is changed again and then you invest again. Is that 
what you are saying?
    Mr. Bailey. Yes. It would be difficult to go to a board of 
directors and say we need to invest hundreds of millions of 
dollars and say we are quite sure whether this will solve the 
requirement or not.
    Mr. Whitfield. And do you view the Air Transport Rule more 
of an obstacle for you than, say, the Utility MACT, or how do 
you look at those two?
    Mr. Bailey. Well, the transport rule as it appears now, and 
of course the rules are finally promulgated but it appears that 
we will be required to comply beginning in 2012 and 2014. The 
time just does not permit us to make the capital additions. So 
basically we will have to reduce generation.
    Mr. Whitfield. And how serious is your concern that your 
biggest customer, those aluminum smelters--they are your 
biggest customer?
    Mr. Bailey. Yes, sir, they are.
    Mr. Whitfield. How concerned are you that because of the 
increase in price of electricity that they may actually close 
up and leave?
    Mr. Bailey. I am very concerned. As you look at statistics 
over the years, I think there were 34 smelters in this country 
in 1978, now we are down to about 9, and our customers are 
telling us the time they are worried about rate increases. So 
you look at the magnitudes of 40 percent, you look at the 
prices that smelters pay, ours are in the top 20 percent right 
now.
    Mr. Whitfield. One of the things that concerns me is that I 
think this Administration is overselling green energy, and I 
say that because green energy may be available in the long-out 
future but for right now when we expect our energy demands to 
increase by 40 percent, Mr. Segal said that one-half of coal 
fleet availability may not be there, how in the world can we 
meet our electricity demands? Windmills, solar panels, 
hydropower are simply not going to be able to do it.
    My time is expired. Mr. Rush, you are recognized for 5 
minutes.
    Mr. Rush. Thank you, Mr. Chairman.
    The whole premise behind today's hearing on the TRAIN Act 
is that there is a train wreck of EPA regulations coming down 
the pike that will cripple the nuclear industry. And Ms. 
Steinzor, you kind of characterized this as being the great 
grandmother for all federally unfunded mandates. I thought that 
was pretty creative. And then I heard Mr. Segal say that for 
every one green job created, that nine current industrial jobs 
would be lost. I think I heard him say that. What do you think 
about his conclusion that for every one green job that is 
created, there will be nine current industrial jobs eliminated?
    Ms. Steinzor. I have no knowledge of what study he is 
talking about, and perhaps he could enlighten us. I will say 
that we have done a very close examination of a study known as 
Crane and Crane, which is cited a lot by the Small Business 
Administration, and claims that there will be about $3 trillion 
regulations will cost, and among other things, that study 
includes the time people spend filling out their tax returns. 
It is based on an opinion poll in countries that rated whether 
they were a favorable environment from a regulatory 
perspective. It was never intended to be used as a foundation 
for mathematical characterization like that.
    So I would say that every time we have looked at a study 
that gives numbers with that kind of pinpointed precision when 
you look a little bit beneath the assumptions that go into 
those numbers, you find that they are dramatically overstated, 
and I would be happy to look at the study that Mr. Segal was 
referring to.
    Mr. Rush. Would there be any financial costs, in your 
opinion, associated with implementing this act and creating yet 
another committee to study these rules that EPA is already 
studying and mandated by law? And maybe you can answer this: 
what is the cost financially and is it paid for as mandated by 
the new Rules of the House?
    Ms. Steinzor. I actually think that it would not satisfy. 
There has been no analysis of what the unfunded mandate would 
be on State governments but also private sector, everybody 
sitting at this table. One of the things the legislation does 
is to require this committee to analyze what a potential 
permitting action, how that would affect electricity prices, 
and to analyze that, you need to know everybody who is thinking 
of a project and might get a permit out to 2030, and the only 
way to do that is to ask them. So I would expect everyone at 
this table to be receiving, except for me of course and Mr. 
Schaeffer, to be receiving an information request for this 
committee, and if they don't, then the number is going to be a 
stab in the dark, which is really the problem with it, very 
expensive and yet won't be accurate.
    Mr. Rush. Mr. Schaeffer, are there any costs to business 
associated with delaying industry-wide rules and regulations 
and pushing regulatory reform further down the road for some 
future date? Is there any cost to businesses that you could 
think of?
    Mr. Schaeffer. Is that directed to me?
    Mr. Rush. Yes.
    Mr. Schaeffer. My apologies.
    Mr. Rush. Why don't I ask you again. Mr. Schaeffer, are 
there any costs to business associated with delaying industry-
wide rules and pushing regulatory reform further down the road 
for some future date?
    Mr. Schaeffer. Congressman Rush, I think that generally 
is--I think the delay of game is a major tactic in Washington. 
If you can push the rules off to the future, you save money, 
and that is fair enough if that is what people want to do. I 
tried to make the point earlier in my testimony, these 
regulations had statutory deadlines, were supposed to have been 
met many years ago. They were not. They will now be met more or 
less around 2015 instead of a decade or more earlier, in some 
cases 20 to 30 years earlier. In all that time, the industry 
has been able to save money that they otherwise would have had 
to spend meeting the deadlines that Congress set out for these 
regulations.
    Mr. Rush. Yield back.
    Mr. Whitfield. The gentleman from Oklahoma for 5 minutes.
    Mr. Sullivan. Thank you, Mr. Chairman.
    Mr. Segal, could you comment on the statements of Ms. 
Steinzor, please?
    Mr. Segal. Sure. Well, with respect to green jobs, the 
study that I quoted actually deals with experience in Europe, 
specifically in Spain, which found that for every four so-
called green jobs that were created, nine industrial jobs were 
lost. And I will tell you, it comes from a country that was 
very skeptical about that conclusion. In fact, Spain, Italy, a 
number of countries in Western Europe are very proactive when 
it comes to encouraging investment in green jobs. Imagine how 
disappointed they were to learn that the so-called green jobs 
tend to pay substantially less in salary, are more temporary in 
duration, i.e., operating a coal plant versus constructing a 
wind farm, and has a whole lot less as far as actual numbers of 
jobs are concerned. Since that study came out, it has been 
supplemented with data, not just from the Spain study but also 
from Denmark and from Scotland and from Germany, again, 
countries that really were dedicated to promotion of green 
jobs. So we have got a situation where this is somewhat 
illusory.
    Bottom line for the train wreck, if you will, or the 
overlapping regulations in the power sector, there is only one 
study to date, and I include the Environmental Protection 
Agency, that has actually netted out offsetting near-term 
construction jobs from putting on a new whiz-bang at a power 
plant versus actual loss from being capacity offline. That is 
the study that this committee has heard today performed by ICF 
International released in January of 2011 using the same 
contractor and the same proprietary model that the 
Environmental Protection Agency uses but using more realistic 
assumptions about the actual technology that will be required 
to implement these rules, one study, and it shows a deficit of 
2.5 million jobs if we have the simultaneity of adoption that 
is proposed and warmly welcome by the Environmental Protection 
Agency.
    Mr. Sullivan. Thank you, sir.
    Mr. Cauley, what could people expect to happen when the 
reliability of electricity supply is low?
    Mr. Cauley. In the worst case, Congressman Sullivan, when 
we have a shortage of supply we end up with rolling blackouts 
and those sorts of things. Usually the industry is planning 
ahead to make sure that there is adequate supply but things 
like extreme weather and conditions can create shortages.
    Mr. Sullivan. In your opinion, is it possible to perform a 
robust forecast of electricity reliability without doing some 
kind of cumulative analysis of the potential impacts of 
regulations?
    Mr. Cauley. I think a cumulative analysis is essential, and 
that is why we as an independent organization have taken that 
responsibility on and produced our report last October and will 
continue doing assessments in the future.
    Mr. Sullivan. Also, given the responsibility that has been 
given to the NERC to ensure the reliability of the bulk power 
system in North America, would NERC consider it sufficient to 
look at the impact of regulations one by one instead of in a 
cumulative analysis? If not, why not?
    Mr. Cauley. The challenge is that the real decisions for 
investing in new plants, new facilities is a long-term 
investment decision. It requires siting. It requires 
significant investment resources and it is not a year-by-year, 
month-by-month decision process. So to make effective decisions 
that are good for customers, a comprehensive look is essential.
    Mr. Sullivan. Also, of the major EPA rules NERC analyzed in 
its assessment, which regulations have the greatest potential 
reliability implications?
    Mr. Cauley. The greatest impact was the cooling water 
regulation, according to our report completed last October.
    Mr. Sullivan. Thank you, sir. I appreciate it. I yield 
back. Oh, I have some more time? OK.
    I would like to say that in region 6, the EPA, just to show 
you how these regulations cost people, cost states is, we did a 
state implementation plan, required to do that, to achieve a 
goal the EPA wanted us to achieve, and they came back and did a 
federal implementation plan, which cost hundreds of millions 
which just get passed onto the consumer. I just think that that 
does have an impact on our economy, does have an impact on 
jobs, and certainly none of that was done before--they didn't 
analyze anything before they did that, and I think that you are 
seeing this hurting the economy, hurting the jobs. You see 
these EPA rules. I heard there is more coming down the pike 
that are hundreds of millions of dollars each, and I think that 
having analysis of it is not something that is bad. Thank you.
    Mr. Whitfield. Mr. Green, you are recognized for 5 minutes.
    Mr. Green. Thank you, Mr. Chairman, for holding the 
hearing, and while I am sympathetic to the argument that we 
face the regulatory landscape we do because of several delays 
in rulemakings over the last couple of decades, that doesn't 
mean we can ignore the fact that companies are faced with 
complying with several rules all at the same time. As such, I 
do think it is appropriate to study the cumulative impact of 
multiple regulations on the competitiveness and sustainability 
of businesses and other regulated entities and the related 
impacts on jobs.
    Concerning the discussion draft before us, though, I think 
there are some drafting issues that need to be addressed, and I 
also think we should look at or least acknowledge the public 
health effects of such rules in order to be fair, and hopefully 
I can get to be a yes on the bill, Mr. Chairman, but I would 
like to look at the drafting. I am glad this is a draft and I 
would like to work with you on it, and I think I share that 
with our ranking member, Congressman Rush.
    Now for my questions. Are any of you able to comment on how 
the EPA is complying with President Obama's July 18th Executive 
Order stating agencies must consider cost and how best to 
reduce the burdens of American business and consumers? Do we 
know what the status is? Scott?
    Mr. Segal. Well, I will tell you this much. The agency has 
asked for folks to file comments, and so there is an open 
process there, which is good, and people will file comments on 
it. That said, the executive order was released in January and 
we have a raft of rulemaking proposals that come out, 
particularly in March, and it seems as though these 
rulemakings, that was a golden opportunity to comply with the 
executive order would have been to acknowledge cumulative 
impact or at least, how about this, to acknowledge the 
Executive Order in these new proposals that came out and of 
course, none of them, they just barreled on down the path full 
steam ahead.
    So I don't think they have taken it to heart, the spirit of 
the executive order, which is what makes the TRAIN Act so 
interesting because it actually gives teeth to the executive 
order, assuming it is drafted appropriately.
    Mr. Green. Mr. Schaeffer, I understand you argue that the 
industry should not complain because these rules should have 
been implemented years ago. So how do you respond to the fact 
that these rules now are all coming down the pike at once? Take 
Mr. Bailey's statement, for example, that the expense of 
installing control equipment on coal-fired generator units to 
comply with two of the rules may be a wasted effort if it is 
later found that conversion to natural gas is the best solution 
to meet the later issued deadline. How do you respond? Of 
course, coming from Texas, I think everything ought to be 
natural gas, but how do you respond to it?
    Mr. Schaeffer. Congressman Green, that is a good question. 
I am confused by what I have heard in the discussion because on 
the one hand, I hear it is all coming together, it is too much, 
and on the other hand, I hear, well, we kind of need it all to 
come together so we can plan and be rational about it, and in 
fact, we have heard the industry testify to that effect for 
years. They would like to see it all at once. So I am not sure 
if that is an answer.
    I will quickly say that some companies have already done 
the work needed to comply with these rules and if they are put 
off, we are not going to have a level playing field. In my 
State of Maryland, we have big coal plants, coal supplies more 
than half the electricity, mercury down by nearly 90 percent, 
sulfur dioxide virtually eliminated at the Brandon Shores 
facility, baghouses put on, millions of hours of work created 
for people. Those plants are ready. They anticipated these 
rules. They didn't bank on being able to delay compliance. Then 
on the other hand, we have some plants that have done very 
little, and for those, yes, they are going to have some costs 
but I don't want to leave the impression that we have got all 
the coal plants in the same situation because they are in very 
different places.
    Mr. Green. I am almost out of time. I have a question for 
Mr. Cauley, but Mr. Segal, thank you for testifying, and we 
worked together a lot of years on energy and I appreciate it. I 
would like to ask you, though, about timing and the 
implementation of the Utility MACT Rule. I have heard that 3 
years is just not feasible for compliance, and Mr. Cauley, feel 
free to respond also. How much time would these facilities need 
to comply with this rule, assuming there is no delay in the 
rule or changes made to it?
    Mr. Segal. There are two elements that we need to keep in 
mind. One is timing, and 3 years, you know, to begin the 
process in 2015 is not even 3 years when you consider the 
planning process. A minimum of 5 years is needed in order to 
really plan it out, and even that is pushing it, but there are 
also substantive issues because it is not just a timing 
question. It is a question of how you establish the MACT floor. 
It is a question of whether there is adequate, what is called 
subcategorization within the rule that will make the difference 
between whether this rule is workable or not, even if given a 
significant amount of time. So there is a time issue and a 
substance issue.
    Mr. Green. I know I am out of time, but Mr. Chairman, could 
Mr. Cauley respond? Is there anything different than from what 
Mr. Segal said?
    Mr. Cauley. I would just defer to Mr. Segal as representing 
the owners and operators.
    Mr. Green. OK. Thank you, Mr. Chairman.
    Mr. Whitfield. Mr. Shimkus, you are recognized for 5 
minutes.
    Mr. Shimkus. Thank you, Mr. Chairman, and thank you all for 
coming. If they put up the Edison Electric analysis of the 
train wreck real quick, I said that in my opening statement. 
Does anyone disagree that these regs are coming down in this 
timeline? No. So everyone agrees that these eight regulations 
are coming down between 2008 and 2016. You disagree?
    Mr. Schaeffer. I don't have it in front of me and I can't 
see it here.
    Mr. Shimkus. All right. Well, I will give this to you and 
then you can confer, but I think the answer is, no one 
disagrees that this is the train wreck. This is what we are 
referring to. Ozone, SOX, NOX, transport, 
water, particulate matter, ash, mercury, carbon dioxide. Now, 
we tried to address carbon dioxide today on the floor to deny 
EPA the ability to regulate greenhouse gases. We are going to 
continue to do that. We will probably work on some of these 
other ones like the water, especially particulate matter. I 
mean, these are ludicrous. They are crazy as the carbon dioxide 
regulations, so I hope, Mr. Chairman, we move on some of these 
easier ones to address like we did on the floor today.
    The question was asked, has the EPA complied with the 
Presidential Executive Order. Mr. Segal is the only one who 
responded. The order came out in January. Regulations came out 
in March. I would submit no. No one else responded to that 
question by Mr. Green. Yes, quickly.
    Ms. Steinzor. Can I just ask if you are concerned about the 
schedule, wouldn't it be more straightforward to try and amend 
the Clean Air Act?
    Mr. Shimkus. Well, I think through the court rulings, the 
court rulings already said, which we disagree with, that the 
Clean Air Act was designed for criteria pollutants. We disagree 
with the court ruling that CO2, which is a non-toxic 
emittant, is a criteria pollutant.
    Let me move on. I don't have enough time to debate you. You 
are always welcome to come visit with me in the office.
    Mr. Bailey, tell me about this big slush funds that you 
have developed in your co-op over the last 10 years or 30 years 
because you haven't complied with some futuristic view of rules 
that are coming down? Do you have one?
    Mr. Bailey. Well, as I said, we are nonprofit.
    Mr. Shimkus. So you don't have a slush funds? You haven't 
built up all this capital money?
    Mr. Bailey. Well, actually our net book value right now is 
around $980 million.
    Mr. Shimkus. So to comply with $1 million of capital 
development and equipment, what are you going to have to do?
    Mr. Bailey. Well, we are going to have to first get some 
clarity to know exactly what the requirements are, and then 
once you have that, you have to construct that.
    Mr. Shimkus. And the problem with the train wreck is, there 
is no clarity.
    Mr. Bailey. That is right. I might point out, though, of 
that $980 net value, $360 million of it is for environmental 
equipment.
    Mr. Shimkus. Thank you.
    Dr. Ridgway, I wish I had more time to ask you more 
questions. I also have Purdue boilermaker, Big 10, all that 
good stuff, but Southern University at Carbondale has a power 
plant. So what are you all going to do to pay for the capital 
expense to meet the train wreck?
    Ms. Ridgway. The current mode that we have to do is request 
fund from the States for capital improvements.
    Mr. Shimkus. And that is readily available in this 
environment, right?
    Ms. Ridgway. Not so much.
    Mr. Shimkus. Tuition, tax increases, it is really going to 
affect the bottom line of universities that operate this.
    Ms. Ridgway. Absolutely, and I think our campuses are 
expanding and these facilities are designed to supply heating 
and cooling and electricity to all the campus buildings.
    Mr. Shimkus. Thank you. I am going to cut you off because I 
want to get to this.
    Mr. Schaeffer, Ms. Claudia Rogers testified in the Small 
Businesses Administration yesterday on the House Committee on 
Oversight, and she says EPA now has the complete--it is right 
here--``EPA now has completed the regulatory process which has 
or will soon subject small businesses to the burden of Clean 
Air Act permitting, a burden that the tailoring rule has failed 
to address for some and is only delayed by a few years. 
Throughout the rulemaking process, our office has informed EPA 
that it should adequately consider the impacts of this program 
on small business.'' I would like to submit this for the 
record. You have testified that the Administration has 
exhaustively reviewed this, did you not?
    Mr. Schaeffer. Yes, I did.
    Mr. Shimkus. Isn't the Small Business Administration part 
of the Administration?
    Mr. Schaeffer. You know----
    Mr. Shimkus. My point is, I reject your premise.
    Mr. Schaeffer. Would you like an answer?
    Mr. Shimkus. Well, no, I am going to answer it because the 
Small Business Administration is part of the Administration. 
They testified yesterday this is disastrous, and I will end up 
with Ms. Steinzor.
    You have been before us before. Just briefly, I will just 
say you say it is a crystal ball to be able to project cost, 
although you testified that the health benefits that go out to 
2025 can be made. So which is it? Is economic cost projected 
out 25 years a crystal ball or are the health savings projected 
out to 2020, 2025? Can you project health benefits but not 
project economic costs?
    Ms. Steinzor. The health----
    Mr. Shimkus. Which is the real crystal ball?
    Ms. Steinzor. The health benefits have to do with rules 
that have already been promulgated. Your legislation deals with 
rules that haven't----
    Mr. Shimkus. You say we can't project economic costs 20 to 
25 years out?
    Ms. Steinzor. When you have a final rule, you can, but your 
legislation covers----
    Mr. Shimkus. You can't have it both ways. You can project 
out to 2025.
    Mr. Whitfield. Mr. Matheson, who is the author of the 
legislation with Mr. Sullivan, you are recognized for 5 
minutes.
    Mr. Matheson. Thank you, Mr. Chairman. I appreciate the 
time and appreciate the witnesses coming here today.
    I think the goal behind this legislation, and we are here 
to have a hearing to figure out if there are ways to perfect it 
and make it better, but the goal as you look at the situation 
where EPA right now has the ability to look at costs and 
benefits of rules individually, and that is important. The goal 
here is, maybe we ought to take a look at how these things work 
when you put them all together, and we want to harmonize that 
process, and I think that really is the goal. The goal is not 
necessarily to delay things. The goal is to have some credible 
information where instead of everyone working in their own 
little stovepipe, we are all working together and looking at 
the cumulative impact, and if there are suggestions among the 
witnesses, any of them, about how to refine this legislation to 
meet those goals better than the way it is written now, as one 
of the authors of the legislation with Mr. Sullivan, we are 
open to that, and so beyond the testimony today, if people want 
to submit other ideas to us, I ask you to do that because that 
is where we really coming from. We are not talking about 
focusing only on costs. Mr. Schaeffer, I noticed from your 
testimony you indicated you felt concern that the study would 
only focus on study, but there is nothing in the legislation 
that mentions specifically costs or benefits. The legislation 
talks about effects and impacts across a variety of sectors, 
and I think that is what we are looking for. So I don't think 
our intent was to not include other considerations when we talk 
about effects and impacts. There is a quick statement and I 
wanted to ask a couple questions.
    First of all, Mr. Cauley, as you know, NERC is one of the 
participants that is included in the study, and you have 
already studied aggregate effects of four of EPA's pending 
rules--cooling water intake structures, Utility Maximum 
Available Control Technology, Clean Air Transport Rule and coal 
combustion residuals. Can you elaborate on the recommendations 
NERC provided to manage the implications of implementing those 
four rules to ensure power supply is not disrupted?
    Mr. Cauley. Our study looked at plans that were in place 
with existing resources and planned resources, and our 
assessment determined that as much in the worst case if 78 
gigawatts of generation would be impacted would become no 
longer cost-effective to operate. So our concern as a 
reliability organization is ensuring that if those rules were 
put in place that we would have sufficient time and planning to 
have alternative resources put in place, and that is our job, 
is to look out into the future and see if there is something 
bad going to happen for reliability.
    Mr. Matheson. Do you think it is possible to expand that 
study for all of the rules that are listed in the draft 
legislation?
    Mr. Cauley. I think as long as there is good definition 
around the expected rules and obligations, I think that kind of 
study can be done.
    Mr. Matheson. Mr. Bailey, you mentioned in your testimony 
like a lot of electric utilities around the country and in my 
district that because the rules from the EPA have not been 
coordinated, you are facing a lot of uncertainty over how to 
plan for upgrades and comply with various different deadlines. 
How do you think this act will help Big Rivers with investment 
decisions and planning for your facilities as you go forward?
    Mr. Bailey. Well, certainly if there is a coordinated 
effort, it could lead to answers at least at the same time and 
then presumably there will be a reasonable time to implement, 
and certainly you have got certainty at that point and feel 
much more comfortable proceeding.
    Mr. Matheson. Mr. Chairman, at this point that is all the 
questions I have. I just want to reiterate, if people have 
suggestions to meet the goals I talked about, we are open. That 
is why we have hearings on draft legislation to look for ideas, 
and we welcome suggestions. Thanks so much. I yield back.
    Mr. Whitfield. Thank you, Mr. Matheson. Mr. McKinley, you 
are recognized for 5 minutes.
    Mr. McKinley. Thank you, Mr. Chairman.
    I have got a series of observations, as I say. One was, and 
I am sorry that the Congressman from California is not here 
right now because he made the statement earlier, he said that 
we should--his quote, ``We should consider the costs when we 
are evaluating the benefits,'' but yet we have had come before 
our committee members of the EPA that said that is not their 
responsibility. I am not sure, there is a contradiction there. 
If we should, then why aren't we doing it? And I think that Dr. 
Ridgway has really hit on this, this whole subject of 
uncertainty. As engineers, we deal in certainty, and there was 
an issue, I think Mr. Schaeffer talked about, we should follow 
the studies. The train wreck was a known entity. We know when 
it was going to happen. We could see it on a chart. But yet 
here are two reports that show the uncertainty with this is 
that--I would like to enter these in the record if I could get 
unanimous consent to admit these. These are reports that were 
done in 1993 and 2000 that said, for example, fly ash is not a 
hazardous material but yet the EPA is going to impose that. 
That is the uncertainty we are talking about. You can have a 
schedule, but when you are dealing in the real world where the 
EPA rejects its own studies and does this, I just find that 
unconscionable. It is no wonder that Purdue and other 
universities and other coal-fired generating houses are scared 
to death of what is going to happen as it relates to the fly 
ash.
    I am just curious, if I could ask a question of you, Dr. 
Ridgway, how much money is that going to cost Purdue by not 
being able to implement their project?
    Ms. Ridgway. The boiler project or for the coal ash?
    Mr. McKinley. Coal ash.
    Ms. Ridgway. From the coal ash standpoint, and we generate 
coal ash right now, but our current cost for handling for that 
material right now is about $300,000 a year. If EPA goes and 
classifies that material as hazardous waste, it increases out 
cost to $25 million a year to dispose of that material.
    Mr. McKinley. But yet that is the frustrating part here is 
to sit here as a new member and hear these people come up and 
say that we are not supposed to consider the cost. Where is 
that $25 million going to come from? Is it student fees? Is it 
going to be increased taxes? I am just amazed at the 
insensitivity to people about these cost issues of what they 
would be.
    But go to the boiler issue. You were going to put a new 
boiler in, a new high-efficiency unit in?
    Ms. Ridgway. Yes, we were going to add capacity to our 
existing combined heat and power facility. It was a clean coal 
technology boiler, and because of regulatory uncertainty, we 
have not moved ahead with that project. So we still have to 
provide steam to campus and we still have to provide chilled 
water, and we will be purchasing more electricity because we 
will be unable to generate that power in-house, which is what 
we historically have been able to do, and I don't have the 
specific numbers but I can certainly get that to you later.
    Mr. McKinley. Thank you. I think you have gone right to the 
core of this train wreck, the uncertainty that is swirling 
around. We are seeing companies who use fly ash, that use fly 
ash in concrete as an additive. They use fly ash in drywall 
manufacturing and they are scared right now. They don't know 
what to do. Everyone is frozen in place because of the 
uncertainty of this regulatory activism from the EPA. Companies 
are afraid to do anything with it. So what we are going to wind 
up doing is we are either going to lose jobs, we are going to 
spend a lot more money and we are just going to cause people 
concern, and I don't think that is our mission here in 
Washington to do that.
    A major powerhouse that was going to burn Ohio has switched 
over to gas because of the uncertainty that you have dealt with 
at Purdue. That means thousands of jobs have been lost in the 
coal industry of West Virginia and all through Appalachia 
because of the uncertainty of the EPA. I have got a chemical 
plant in my district that is seriously considering, they are 
taking designs right now to switch from coal over to gas. That 
is going to cost West Virginia and Appalachia thousands of jobs 
over a period of years. I can't thank you enough for coming 
here, Ms. Ridgway, to be able to talk about this issue. You 
have an exact example of why we should be more concerned about 
reining in this rogue agency. Thank you very much for coming.
    Ms. Ridgway. Thank you.
    Mr. Whitfield. Thank you, Mr. McKinley, and Ms. Capps, you 
are recognized for 5 minutes.
    Mrs. Capps. Thank you very much, Mr. Chairman, and I want 
to express my thanks to each one of our witnesses for their 
presence here today and your testimony.
    Mr. Schaeffer, we have heard a lot of concern today about 
the notion that EPA has decided to impose multiple regulations 
in the upcoming years, but as you point out, these regulations 
are long overdue and industry has had years to plan to meet and 
there are no surprises here. There has been a lot of time to 
plan to meet these requirements. Would you discuss the impacts 
of this delay on industry and on the public? I know you brought 
it up in your testimony but just so we get this clear in the 
record.
    Mr. Schaeffer. Congresswoman Capps, as I was trying to 
explain earlier, that we do have some power companies that have 
gotten ahead of the curve and, yes, in some cases have made the 
decision to switch to gas. In, you know, a market economy, we 
are going to see those decisions, and some of that is driven by 
regulation. A lot of it is driven by the fact that gas is a 
cheaper fuel now, and I thought I had read that Purdue had 
switched a boiler to gas that they were planning to build for 
that reason. In the State of Maryland, we have got very strict 
requirements that haven't seemed to affect the use of coal in 
the State. We still have big coal plants. It is just that they 
are well scrubbed and well controlled. So if you have a company 
that has banked on delay and waited until the last minute, 
hasn't looked at the deadlines, hasn't followed the litigation, 
hasn't anticipated these rules, yes, they are going to face 
some significant cost but you have others that have gotten far 
ahead of it.
    The point I was also trying to make earlier is, if you have 
not spent much to comply with requirements that are coming, if 
you haven't scrubbed your plant, for example, and you have got 
a 60-year-old coal plant designed to last 30 years, you are 
going to have to pay for some pollution controls, and to be 
shocked that that is arriving now I think is--I don't 
understand that. I don't see how anybody could not see that 
coming.
    Mrs. Capps. Thank you.
    Given the importance of these regulations to public health, 
I would hope that any desire to understand the cumulative 
impacts of regulations would not in themselves become obstacles 
to their implementation. A cumulative estimate of regulatory 
impact can only have value if it is credible. I am concerned 
that the report envisioned by this bill will be rife with 
uncertainties and will be attacked by all the stakeholders, as 
one example, which has come up before, coal ash. The committee 
would be asked to analyze the impact of coal ash regulations 
along with other rules, even if that regulation is not 
finalized. We have heard conflicting testimony today about the 
potential impacts of regulating coal combustion waste because 
there are still a number of unknowns with regard to the rule. 
It is not known whether regulation will occur under subtitle C 
or D, as one example. It is not known whether regulation under 
subtitle D, which would create no federally enforceable 
requirements, would have a significant impact. And it is not 
known whether regulation under subtitle C would impact 
beneficial reuse because of stigma effects.
    So in order to form the analysis required by this bill, the 
committee would need to fill in those unknowns with 
assumptions, no choice that will be supported by all 
stakeholders, and we can illustrate that right here today. I 
could ask three of you a question, which I will now, to 
demonstrate.
    Dr. Ridgway, if the committee assumes subtitle C regulation 
and little impact on beneficial reuse, would you view the 
resulting analysis as credible?
    Ms. Ridgway. I am not sure I can speak to that because I 
don't know what information goes into that analysis.
    Mrs. Capps. That is exactly the point. So really, to be 
honest, then you would have to say, no, I couldn't just for all 
the reasons you said.
    Ms. Steinzor, on the other hand, if the committee assumes 
subtitle C regulation and a halt to beneficial refuse, would 
you view the resulting analysis as credible?
    Ms. Steinzor. No.
    Mrs. Capps. And Mr. Schaeffer, if the committee assumes 
subtitle D regulation and nationwide compliance with the 
resulting guidelines, would you view the resulting analysis as 
credible? Well, there you have it. There shows where we are. 
Our panel of seven stakeholders can't agree on the impact of 
one rule, let alone the cumulative impact of the rule and Clean 
Air Act regulation. I cannot imagine how a committee of Cabinet 
Secretaries and Mr. Cauley is going to produce a credible 
estimate of the impact of these listed rules, let alone the 
additional rules that aren't listed, and that would be with all 
the time in the world, not within the one month that they 
appear to have under this bill, and I have used as much time as 
I have.
    I appreciate the opportunity. Thank you, Mr. Chairman. I 
will yield back.
    Mr. Whitfield. Mr. Olson, you are recognized for 5 minutes.
    Mr. Olson. I thank the chair, and before I get started, I 
would like to identify myself with the comments from my 
colleague from Texas, Mr. Green, who said that we like gas in 
Texas. We like it a lot.
    Welcome to the witnesses. I am grateful for your expertise 
and your patience today.
    My dad spent his entire career in the paper industry, over 
35 years, mostly in the white mills across our country. I know 
firsthand knowledge that the industry is committed to clean air 
and clean water. So my first question is for you, Mr. Hess. The 
proposed Cooling Water Intake Rule, 316(b), subjects facilities 
beyond electric generation facilities to regulation including 
paper manufacturers and oil refineries. Will these facilities 
be able to comply with the criteria in the proposed rule and 
what are the economic impacts? Put another way, is the 
technology there and what is it going to cost?
    Mr. Hess. I can't speak to the details of that regulation 
because I have a staff, just as you have a staff, that advises 
me on environmental regulations, but I can tell you it is going 
to cost a lot because the environmental regulations that we 
have implemented at Spring Grove to address the EPA MACT and 
other rules have cost $50 million at the end of the 1990s and 
we are looking at $10 million to $20 million for Boiler MACT 
currently, and if the original MACT program is revised, we are 
looking at another $10 million to $20 million. I don't have the 
specifics on the regulation you referenced but I am just giving 
you a taste of the impact that we have had at the Spring Grove 
mill.
    Mr. Olson. Thank you, sir. So I assume that is a pretty 
negative impact on our ability to complete in the global 
market?
    Mr. Hess. Yes, sir, that is the major concern that I have 
is that we do complete in the global marketplace and that all 
these costs, the cumulative costs have to get passed through 
the supply chain, which makes us less competitive in the 
marketplace, makes imports and other countries have lower cost 
products, and at the end of the day he who has the best product 
at the lowest cost wins. We can complete in the global 
marketplace if we are playing on a fair playing field but today 
we are not because no other country plans to regulate as the 
train wreck is coming.
    Mr. Olson. Yes, sir, and that is something we are here to 
stop.
    Mr. Segal, my next question is for you, sir. In your 
opinion, do you think EPA has been proactive during the 
rulemaking process and explaining to stakeholders and the 
public the reasons for certain regulations and potential jobs 
and economic impacts of those regulations?
    Mr. Segal. Well, the best thing to point to to answer that 
question, Mr. Olson, is to look at the Regulatory Impact 
Analysis that the EPA released when it advanced its rule, and 
it is a very, very curious document. I don't commend it to you. 
It is north of 500 pages and it will cure any insomnia, but the 
good part about it is, it really lays bare a lot of what is 
going on here. One of the critical assumptions the agency made 
and that explains why they say the cost of that rule is much 
less than everybody else who is taking a look at this rule is 
they make an assumption about certain technologies that could 
be used so that you wouldn't have to install scrubbers 
necessarily. So we thought this was very curious because, you 
know, my clients actually make power. You know, we know a thing 
or two about that technology so we thought we would take a 
look. And we followed, like with so many things, you had to 
follow the footnotes, and when you do, you find there is no 
study on the technology they cited. There is a 5-page 
PowerPoint presentation that says as one of its recommendations 
hey, we did a 2-week study here, we ought to see if it scalable 
and could actually be used on a power plant, and the EPA 
accepted that with 100 percent confidence in order to lower 
their cost assessment of the rule. If we had done that in a 
rulemaking comment or worse yet, in our of our corporate 
reports on our earnings, can you imagine the hue and cry that 
would have been raised? But apparently for EPA, when it comes 
in their favor making untransparent assumptions is a great way 
to reduce costs in your Regulatory Impact Analysis, and that is 
just one example. We have many other examples that would 
illustrate the point.
    I do want to make one other point, though, sir. We have 
heard over and over again these companies have known for 20 or 
30 years what the rules would be, they have been living on the 
hog by simply not complying for the intervening 20 years. The 
trouble is, there is a fundamental disagreement between 
Professor Steinzor and Mr. Schaeffer. See, Mr. Schaeffer says 
that 20 years in advance you ought to know what all the details 
of the rule are just by looking at what the statutory 
obligation is. Ms. Steinzor says you can't possibly do an 
assessment, an economic assessment of a rule until you have the 
final rule, which, by the way, strikes me as reasonable. And it 
therefore strikes me that Mr. Schaeffer is perhaps not so 
reasonable in suggesting that people have known for 20 years 
what their obligation was. I think he knows that and I know 
that. I think all of you should know it too.
    Mr. Olson. Thank you, and that is why I have introduced a 
bill to make sure that EPA puts in a study the numbers of job 
gains or losses from any regulation, and again, ``curious,'' 
that is not a word we want to use in a regulatory environment. 
Thank you for your time.
    Mr. Whitfield. Thank you, Mr. Olson. Mr. Inslee, you are 
recognized for 5 minutes.
    Mr. Inslee. Thank you, Mr. Segal. You represent something 
called the Electric Reliability Coordinating Council. How many 
companies are members of that coalition?
    Mr. Segal. I think eight.
    Mr. Inslee. And could you give us their names, please?
    Mr. Segal. Sure.
    Mr. Inslee. Thank you. You don't have to right now but if 
you could just give it to us for the record, I would appreciate 
that.
    Mr. Schaeffer, my understanding of this proposed 
legislation would basically assess some of the costs associated 
with some regulatory compliance, particularly for things 
adopted to try to improve the environment and therefore improve 
the health of Americans. My understanding of the legislation 
is, it does not attempt to assess the value to health of 
Americans that would be associated with compliance with those 
rules nor does it assess the improvement in economic 
performance associated with that corresponding health 
improvement of Americans, nor does it represent the economic 
growth associated with a lot of the technologies associated 
with compliance with these rules. I have to tell you, I just 
can't understand why we would on any of these issues look at 
just cost and not benefits, unless you would assume there is 
never a benefit of anything the government has ever done in 
human history. So I guess the question is, is my assessment of 
the legislation correct in that regard, and can you fathom any 
reason why we wouldn't want to look at benefits as well as 
cost?
    Mr. Schaeffer. I haven't, Congressman, and I heard earlier 
that balance was the goal. I have a copy of the draft and now I 
am concerned that I may not have the right copy because I am 
looking at the list of the things that the agencies would be 
required to study. I see no mention of health. I see no mention 
of the economic issues you just mentioned on the other side of 
the ledger, and it is possible I have the wrong copy or an 
earlier draft.
    Mr. Inslee. So let me ask the panel----
    Mr. Whitfield. I think you have the right draft.
    Mr. Schaeffer. Well, I have the list in front of me and I 
heard Congressman Matheson suggest that health was in here, and 
I don't see it.
    Mr. Inslee. So let me ask the panel, do any of the 
panelists--I am trying to figure why we would ever embrace this 
idea of looking at just costs and not benefits of proposals. 
That just doesn't make sense to me, unless you hold certain 
perceptions. So let me ask you this. Do any of the panel 
members believe that there has never been a benefit to human 
health that came from EPA regulations? Do any members believe 
that on the panel? So we are all on board that at least in some 
instances the EPA helps Americans' health. So that is not a 
reason for not looking at the benefits.
    I would be open to any of you suggesting why if we are 
trying to make intelligent decisions about hard regulatory 
decisions here, can anyone advance a reason to ignore an 
evaluation by the U.S. government of the benefits associated 
with any of these regulatory activities? Can anybody suggest a 
reason why we would only look at the costs? Mr. Segal has 
raised his hand.
    Mr. Segal. Well, you are not going to like me for 
suggesting this but I will say this.
    Mr. Inslee. I haven't formed an opinion yet.
    Mr. Segal. That is right, and that is why I fear that we 
will be moving in that direction. I am going to suggest that it 
is hard to accumulate benefits in environmental rules, and let 
me explain why. You know, since I have come to Washington, 
almost every clean air rule claims particulate matter benefits 
as a reason to adopt that rule. Now, I have come to the 
conclusion, sir, that some of these benefits are the same 
benefits that are being claimed for multiple rule after 
multiple rule, even though the costs, because they are 
requiring new pieces technology, are not the same cost. So I 
would be oK with accumulating, doing a cumulative analysis of 
benefits if we back out--and I cover this in my statement--if 
we back out double counting of benefits that goes on when rule 
after rule after rule uses the same homework. EPA's own 
analysis on Utility MACT said we didn't do any effort to 
estimate the benefits of actually reducing hazardous air 
pollutants. All we did was plug in the old PM numbers that we 
used last time around. That is bad homework.
    Mr. Inslee. I think I understand what you are saying. So 
you wouldn't have an objection then if this committee amended 
this bill to, say, let us look at the health benefits and 
subsequent economic benefits of some of these rules and because 
cautious not to allow double benefits to be counted? But the 
general idea is----
    Mr. Segal. I would like to work on something like that and 
really focus in on that double counting.
    Mr. Inslee. Well, let me just ask you, don't you agree we 
ought to look at the benefits of these rules in this 
legislation as well as the cost, Mr. Segal? Would you agree as 
a general principle we ought to do that?
    Mr. Segal. I was curious about Mr. Matheson's statement 
too, and I looked at the bill, and it says that you are 
supposed to look at cumulative impact and then it says ``impact 
is supposed to include'' and it lists all these economic 
factors. But, I mean, I guess cumulative impact could other 
things too. It is not exclusive of that list, so maybe that is 
what Mr. Matheson meant. I don't know. I haven't talked to Mr. 
Matheson about it.
    Mr. Inslee. Thank you.
    Mr. Whitfield. Thank you, Mr. Inslee. At this time, Mr. 
Griffith, you are recognized for 5 minutes.
    Mr. Griffith. Thank you, Mr. Chairman.
    Mr. Segal, going back to this report, I was very interested 
in your comments in regard to how the EPA lowered their costs 
by using a slide deck that they then extrapolated from in order 
to lower the cost. Am I not correct that if this was a 
corporation doing that, that the people who knew they were 
lowering that to make it look like there was less cost would 
suffer criminal penalties?
    Mr. Segal. I tell you, if it was a corporation and we based 
representations in our quarterly filings on something like 
that, we would be in a world of trouble. If it were a law firm 
basing legal analysis on that, we would be in a world of 
trouble but the EPA felt pretty comfortable with it.
    Mr. Griffith. A world of trouble includes criminal 
penalties, does it not?
    Mr. Segal. That is not my field of practice but I wouldn't 
call you a liar.
    Mr. Griffith. All right. Thank you. And I am not sure on 
each case but it was my area of practice.
    Mr. Segal. All right.
    Mr. Griffith. Let me shift gears. Mr. Hess, thank you very 
much for being here. Some of the folks on this committee who 
are getting to know me think that all we do in south West 
Virginia is coal because I talk about it all the time, but we 
also have textiles and cellulose production and paper 
production, and most of the pressure on our industry in our 
area, and I want to know if this is true nationally, is from 
Scandinavia and South America. Would that be true nationally, 
or is that just my particular area?
    Mr. Hess. That is part of the pressure. There is also 
pressure from Asia, I mean, and from China as well.
    Mr. Griffith. All right. And the plant in my district that 
employs a lot of the folks in the Allegheny highlands indicated 
that they had a chart similar to the one that we have got here 
from Edison with all the different things coming at them in the 
next few years, and if they get to a certain point they are 
just not going to be able to survive the market pressures and 
that they would probably have to move to properties in another 
country. Is that true nationally, you are finding that to be 
the same situation, that most of these companies, if all of 
these hit them at one time they are just going to have no 
choice but to go somewhere else?
    Mr. Hess. I can guarantee you that as part of the options 
analysis that companies are going through, they are looking at 
whether they can maintain their operation within the United 
States, and because of the confusion that is associated with 
the rules and the uncertainty and the magnitude of change that 
is coming at the pace it is coming, it is impossible to plan 
appropriately in the business, and I can tell you right now, we 
are looking at the possibility of boiler shutdown as well 
because of these type of rules.
    Mr. Griffith. And not every plant can switch over to 
natural gas, can they?
    Mr. Hess. No, not every plant can switch over to natural 
gas, and clearly the boiler MACT rules are pushing plants 
towards natural gas. We are doing a natural gas study. But not 
every plant has the infrastructure to burn natural gas. In 
addition, you know, part of what makes a paper company 
successful is being able to burn biomass residuals, and there 
is a whole sister act with regard to biomass residuals being 
classified as solid waste.
    Mr. Griffith. Let me underline also that few of our 
furniture manufacturers have survived, and they do the same 
thing. They burn off the leftover biomass, the wood pieces that 
they don't use.
    Mr. Hess. And that is what the President himself has 
encouraged business to do. It is a renewable resource, biomass, 
and with the regulations coming down, with the sister regs 
about the biomass being classified as solid waste, it will 
trigger incinerator MACT for some of these plants and encourage 
them not to burn biomass but instead convert to fossil fuel, 
which is exactly opposite of what the Administration is 
pursuing.
    Mr. Griffith. Let me switch to you, Dr. Ridgway. We have 
some public universities in the same plight that Purdue is in, 
but I am wondering if you can tell me, because I think it is 
true, that there are a lot of independent, non-public 
universities and colleges, maybe not as big as Purdue but who 
are in a similar plight, but they don't have anybody but the 
students to go to to pay for this. Isn't that true? Because 
they don't have taxpayers that they can ask for increased money 
to pay for some of these things.
    Ms. Ridgway. I honestly can't speak to the funding 
mechanisms of other institutions. I just know our own process.
    Mr. Griffith. But you said earlier that you would have to 
go and ask the State for more money. If you don't have the 
State and all you have are the parents and the students who are 
going to the school, it would make sense, would it not, that 
they would end up having to bear the cost through higher 
tuition?
    Ms. Ridgway. It is possible, but I won't commit to that.
    Mr. Griffith. All right. And it is possible that if the 
State doesn't have the money, that the trustees of any public 
institution including Purdue might be forced to ask the 
students for a tuition increase. Isn't that true?
    Ms. Ridgway. It is an avenue that is available.
    Mr. Griffith. And so in essence, one thing that could be 
the result of this is higher tuition and making it more 
difficult for middle-class and lower-income families to be able 
for their children to get an education and thus damage 
America's future. Isn't that also true?
    Ms. Ridgway. You have got to get the money from somewhere.
    Mr. Whitfield. Mr. Griffith, thank you very much, and that 
will conclude today's hearing. We appreciate all of you taking 
time to be with us. We do intend to continue to look at this 
legislation. I anticipate that we will try to move this 
legislative and look forward to working with all the members of 
the committee to make it the most effective that we can. And 
once again, I apologize to you all for the delay that we had 
during the votes but we look forward to working with you on 
this issue and others as we move forward.
    The record will remain open for 10 business days for 
additional material to be inserted.
    With that, the meeting is adjourned. Thank you.
    [Whereupon, at 4:37 p.m., the subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]

                 Prepared Statement of Hon. Fred Upton

    Before I came to Congress, I worked in President Reagan's 
Office of Management and Budget. I understand the regulatory 
process; I know how important it is to have reasonable 
regulations to protect the health, safety, and well-being of 
the American people without jeopardizing our economic 
competitiveness.
    That is why I am so troubled by the onslaught of rules 
coming from the EPA, with seemingly no consideration of how 
these rules will affect the competitiveness of our energy and 
manufacturing sectors. Each of these regulations has a 
considerable cost on its own, but we know each rule does not 
exist in a vacuum. The real consequences can only be understood 
if we look at the cumulative impact, when these regulations are 
layered one on top of one another.
    And that is why we are here today--to begin a discussion of 
the TRAIN Act, which seeks to study the cumulative impact of 
this regulatory agenda on our economy, on our nation's global 
competiveness, and on jobs. I applaud Representatives Sullivan 
and Matheson for offering this discussion draft. Everyone knows 
I place a priority on bills developed in a bipartisan fashion, 
which is why I look forward to moving this bill.
    Let me give just a few examples of EPA's breakneck 
regulatory pace to explain why this proposal is so important. 
The agency is not just reviewing one or two of the National 
Ambient Air Quality Standards for the six criteria pollutants 
under the Clean Air Act--EPA is taking steps to make a whole 
host of air standards more stringent simultaneously, despite 
the fact that work still must be done to achieve earlier 
standards. And it's possible even more standards may be coming: 
EPA has not yet announced whether it plans to set a National 
Ambient Air Quality Standard for carbon dioxide.
    Individually, many of these rules are so costly that they 
could noticeably increase energy prices and possibly cause some 
regulated facilities to shut down. But it's the cumulative 
effect of all of them that is truly unprecedented--and in fact, 
we don't believe the cumulative impact is fully understood, 
because it has not been well studied. Again, that is why we 
need the TRAIN Act. This discussion draft will not overturn any 
regulations, or limit EPA's ability to regulate going forward--
it simply asks for the information we need to better understand 
the consequences of these rules in order to protect our economy 
and our jobs while also protecting public health.
    A study conducted by the North American Electric 
Reliability Corporation looked at four EPA regulations 
affecting electric power plants. It found that multiple 
regulations with overlapping deadlines strained scarce 
resources--for instance, with many power plants trying to build 
modifications at the same time, competing for labor and 
engineering services to do the work, it becomes difficult to 
coordinate which power plants will meet our demand for 
electricity on the grid. Between electric generating units that 
will be temporarily offline to make the required changes and 
those that will be permanently shut down, the study concluded 
that overlapping regulations pose real risks to the reliability 
of our electricity supply.
    With rising gasoline prices and stubbornly high 
unemployment, we need a better sense of the cumulative impact 
of these regulations. And in an increasingly globalized 
economy, we also need to look at how unilateral regulations 
affect our international competitiveness. This is especially so 
since China, India, and other nations do not have regulatory 
regimes even remotely as costly and as stringent as that in the 
U.S. The TRAIN Act discussion draft offers a good start to 
gathering the information needed to ensure federal regulations 
are helping rather than causing harm. I yield back.

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